<PAGE>
NATIONS VARIABLE ANNUITY
ISSUED BY:
HARTFORD LIFE
INSURANCE COMPANY
A tax-deferred
variable annuity
Build a Better Financial Future
SEMI-ANNUAL
REPORT
June 30, 1998
Annuities are not FDIC insured.
Annuities are not obligations or deposits of, and are not underwritten or
guaranteed by NationsBank Corporation or any of its affiliates.
Neither NationsBank Corporation nor its affiliates guarantee performance by
the annuity issuer.
Annuities involve investment risks, including interest-rate risk. The market
value of the investment may fluctuate, causing possible loss of the principal
amount invested.
Annuities are unrelated to and not a condition of the provision or term of
any banking service or activity.
FDIC
BANK
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Table of Contents
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Investment Review............................................................... 2
Performance Summary of Hartford Mutual Funds.................................... 16
HARTFORD LIFE INSURANCE COMPANIES SEPARATE ACCOUNT FINANCIAL STATEMENTS AND
NOTES TO FINANCIAL STATEMENTS
Hartford Life Insurance Company Separate Account Two.......................... 18
NATIONS MUTUAL FUNDS
Statements of Net Assets as of June 30, 1998:
Nations International Growth Portfolio...................................... 31
Nations Marsico Focused Equities Portfolio.................................. 33
Nations Managed Small Cap Index Portfolio................................... 34
Nations Discplined Equity Portfolio......................................... 40
Nations Marsico Growth & Income Portfolio................................... 41
Nations Managed Index Portfolio............................................. 42
Nations Value Portfolio..................................................... 47
Nations Balanced Assets Portfolio........................................... 49
Statement of Assets & Liabilities as of June 30, 1998:
Nations Mutual Funds........................................................ 52
Statement of Operations for the Period From March 27, 1998 to June 30, 1998:
Nations Mutual Funds........................................................ 54
Statement of Changes in Net Assets for the Period From March 27, 1998 to June
30, 1998:
Nations Mutual Funds........................................................ 56
Statement of Capital Stock Activity For the Period From March 27, 1998 to June
30, 1998:
Nations Mutual Funds........................................................ 58
Financial Highlights -- For a Share Outstanding Throughout Each Period:
Nations Mutual Funds........................................................ 60
Notes to Financial Statements:
Nations Mutual Funds........................................................ 62
HARTFORD MUTUAL FUNDS
Statements of Net Assets as of June 30, 1998:
Hartford Bond HLS Fund, Inc................................................. MF-1
Hartford Stock HLS Fund, Inc................................................ MF-4
Hartford Money Market HLS Fund, Inc......................................... MF-6
Hartford Advisers HLS Fund, Inc............................................. MF-8
Hartford Capital Appreciation HLS Fund, Inc................................. MF-11
Hartford Mortgage Securities HLS Fund, Inc.................................. MF-14
Hartford Index HLS Fund, Inc................................................ MF-16
Hartford International Opportunities HLS Fund, Inc.......................... MF-21
Hartford Dividend and Growth HLS Fund, Inc.................................. MF-24
Hartford International Advisers HLS Fund, Inc............................... MF-27
Hartford Small Company HLS Fund, Inc........................................ MF-32
Hartford MidCap HLS Fund, Inc............................................... MF-34
Hartford Growth and Income HLS Fund, Inc.................................... MF-36
Statement of Operations for the Six Months Ended June 30, 1998:
Hartford Mutual Funds....................................................... MF-38
Statement of Changes in Net Assets for the Six Months Ended June 30, 1998 and
the Year Ended December 31, 1997:
Hartford Mutual Funds....................................................... MF-40
Notes to Financial Statements:
Hartford Mutual Funds....................................................... MF-44
Hartford Mutual Funds Financial Highlights...................................... MF-54
</TABLE>
Contract owners should refer to the prospectus provided to them at the time of
purchase of their contract for a description of investment alternatives
available in the Separate Accounts. This prospectus, along with the financial
information contained in this report, provides them with complete and
up-to-date financial information regarding the separate Accounts.
This report is prepared for the general information of contract owners and is
not an offer of contracts. It should not be used in connection with any offer,
except in conjunction with the appropriate prospectus which contains all
pertinent information including the applicable sales, administrative and other
charges.
<PAGE>
NATIONS
BALANCED ASSETS PORTFOLIO
PORTFOLIO MANAGEMENT
Value Management Team
JULIE HALE, CFA
SHARRON HERRMANN, CFA
MIKE FULGINITI, CFA
MARCUS GRIFFIN, CFA
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
Growth of a $10,000 investment.
[CHART]
$10,390
$10,292
$9,790
Balanced Assets Portfolio S&P 500
Lehman Govt/Corp
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
Balanced Assets (2.10%)
S&P 500 3.90%
Lehman Govt/Corp 2.92%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS BALANCED ASSETS
PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
Nations Balanced Assets Portfolio declined 2.10% from its inception of March
27 to June 30, 1998.
WHY DID THE FUND PERFORM THIS WAY?
An asset allocation bias towards equities dampened returns as bonds
outperformed stocks over the period. In addition, stock selection was
negative during the period. Holdings in the basic materials and capital
goods sectors experienced notable price declines as earnings expectations
were reduced. The Portfolio's strongest performing equity holding was Union
Texas Petroleum, which rose on an acquisition bid from Atlantic Richfield.
Rubbermaid, Inc. and Scientific-Atlanta were also strong performers as
earnings improved more rapidly than investors had expected. *
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
The Portfolio maintains an asset allocation bias towards equities, believing
that with moderate economic growth and low inflation the stock market should
provide favorable long-term returns. The recent earnings weakness in heavy
cyclicals has prompted us to reduce our near-term earnings estimates and
price targets, but the Portfolio is maintaining an overweight position in
this sector based on attractive long term fundamentals and valuations. The
healthcare and consumer staple sectors appear less attractive and are
underweighted in the Portfolio, based on their less compelling valuations.
* PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE AND MAY NOT BE REPRESENTATIVE OF
CURRENT HOLDINGS
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER
NATIONS FUNDS PORTFOLIOS.
<PAGE>
NATIONS
DISCIPLINED EQUITY PORTFOLIO
PORTFOLIO MANAGEMENT
Structured Products
Management Team
JEFF MOSER, CFA
GREG GOLDEN
BRAD POPE, CFA
DAN SKUBIZ
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
Growth of a $10,000 investment.
$10,390
$10,150
Disciplined Equity Portfolio S&P 500
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
Disciplined Equity 1.50%
S&P 500 3.90%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS DISCIPLINED
EQUITY PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE
THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
Nations Disciplined Equity Portfolio returned 1.5% from its inception on
March 27, 1998 through June 30, 1998.
WHY DID THE FUND PERFORM THIS WAY?
The two major contributors to performance over the period were the technology
and consumer cyclical sectors. These were the best performing sectors in the
marketplace and the Portfolio was overweighted in each. Dell Computer Corp.,
Lucent Technologies, and Ford Motor Co. were three of the best individual
performers. While valuations in technology stocks may be inflated, earnings
have been strong enough to push stock prices higher. Continued strong
consumer confidence and spending in the automobile and retail sectors
resulted in positive earnings surprises for Ford Motor Co., Costco Cos., and
Lowe's Cos. (consumer cyclicals).*
The energy sector, in contrast, was a source of weakness for the Portfolio.
Declining oil prices and reduced economic activity in Asia have had a
negative effect on earnings estimates and stock prices in this sector.
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
We believe the stock market will take a breather for the next six months.
Price-earnings valuations are at very high levels and the rate of growth in
earnings is slowing. We will continue to focus on those companies most
likely, in our view, to report future earnings that meet or exceed
expectations.
* PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE AND MAY NOT BE REPRESENTATIVE OF
CURRENT HOLDINGS
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER NATIONS
FUNDS PORTFOLIOS.
<PAGE>
NATIONS
INTERNATIONAL GROWTH PORTFOLIO
PORTFOLIO MANAGER
BRIAN O'NEILL
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
Growth of a $10,000 investment.
[CHART]
$10,190
$10,049
International Growth EAFE
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
International Growth 1.90%
EAFE 0.49%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS INTERNATIONAL
GROWTH PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE
THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
From inception on March 27, 1998 to June 30, 1998 the Portfolio provided
shareholders with a return of 1.9%.
WHY DID THE FUND PERFORM THIS WAY?
The Portfolio's positive performance was based on its concentration of
investments in growth sectors such as mobile telecommunications,
electronics/information technology and financials. The Portfolio's bottom-up
approach contributed to the positive results in that some of its largest
holdings substantially outperformed the MSCI Europe, Australasia and Far East
Index (MSCI EAFE Index)* in U.S. dollar terms. These included Sweden's
Ericsson and Germany's Mannesmann AG in the mobile telecommunications sector,
Germany's SAP in software/information technology, and in financial services,
Bayerische Vereinsbank of Germany and Bank of Ireland. In addition, the
Portfolio was overweight in Continental Europe, which performed particularly
well, while remaining underweight the U.K. and Japan. Within Asia, the
Portfolio's exposure was defensively concentrated in Australia, through
holdings in News Corp Ltd. and Telstra, both of which outperformed the MSCI
EAFE Index in U.S. dollar terms.**
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
Looking forward, the Portfolio will continue to focus on sectors where we
believe growth prospects are strong, including telecommunications,
electronics, software/information technology and financial services. While
our primary focus will continue to be in developed markets, we will not
overlook potential opportunities in emerging markets including the depressed
Asian markets.
*THE MSCI INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST INDEX IS AN
UNMANAGED, CAPITALIZATION-WEIGHTED INDEX THAT TRACKS STOCKS TRADED ON SIXTEEN
EXCHANGES IN EUROPE, AUSTRALIA AND THE FAR EAST. IT IS UNAVAILABLE FOR
INVESTMENT.
** PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE AND MAY NOT BE REPRESENTATIVE OF
CURRENT HOLDINGS
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER
NATIONS FUNDS PORTFOLIOS
INVESTING IN INTERNATIONAL INVESTMENTS MAY INVOLVE SPECIAL RISKS, INCLUDING
FOREIGN TAXATION, CURRENCY RISKS, RISKS ASSOCIATED WITH POSSIBLE DIFFERENCES
IN FINANCIAL STANDARDS AND OTHER MONETARY AND POLITICAL RISKS ASSOCIATED WITH
FUTURE POLITICAL AND ECONOMIC DEVELOPMENTS.
<PAGE>
NATIONS
MANAGED INDEX PORTFOLIO
PORTFOLIO MANAGEMENT
Structured Products
Management Team
GREG GOLDEN
JEFF MOSER, CFA
BRAD POPE, CFA
DAN SKUBIZ
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
Growth of a $10,000 investment.
[CHART]
$10,390
$10,320
Managed Index Portfolio S&P 500
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
Managed Index 3.20%
S&P 500 3.90%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS MANAGED INDEX
PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
Nations Managed Index Portfolio proved resilient during the period from its
inception on March 27 to June 30, 1998, posting a total return of 3.20%,
slightly below the Standard & Poor's 500 Composite Price Index,* which posted
a return up 3.90% for this time period.
WHY DID THE FUND PERFORM THIS WAY?
The largest companies dominated during the second quarter as both domestic
and foreign investors chose the most familiar and most liquid companies to
ease their minds as the market began to show signs of acrophobia.
To come out ahead during the second quarter, investors had to not only pick
the best companies, but also had to emphasize the right sectors. For
example, the range of returns by sector varied widely from a negative 7.5%
for transportation & services to a positive 8.4% for technology. Although
Nations Managed Index Portfolio gave up some excess return due to its sector
weighting decisions, stock selection was strong enough to overcome this
shortfall and actually produced neutral to positive returns in 9 of the 13
economic sectors.
Strong performers for the quarter included Ford Motor Co.(+37.5%), Gap Inc.
(+36.6%), and Lucent Technologies (+30.2%). Weak performers included Ikon
Office Solutions (-57.8%), Cendant (-48.4%), and National Semiconductor
(-37.3%).**
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
The second half of 1998 should prove to be interesting to say the least for
large capitalization stocks. With valuations at historically high levels,
investors are trying to rationalize a "new" valuation methodology that will
justify these levels. Given these levels, the market is vulnerable to any
negative news; therefore, we remain cautious.
*THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS AN UNMANAGED INDEX
OF 500 WIDELY HELD COMMON STOCKS. IT IS UNAVAILABLE FOR INVESTMENT.
** PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE AND MAY NOT BE REPRESENTATIVE OF
CURRENT HOLDINGS.
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER
NATIONS FUNDS PORTFOLIOS
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE>
NATIONS
MANAGED SMALLCAP INDEX PORTFOLIO
PORTFOLIO MANAGEMENT
Structured Products
Management Team
GREG GOLDEN
JEFF MOSER, CFA
BRAD POPE, CFA
DAN SKUBIZ
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$9,750
$9,628
Managed Small Cap Index S&P 600
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
Managed Small Cap (2.50%)
S&P 600 (3.72%)
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS MANAGED SMALL
CAP INDEX PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT
EXCLUDE THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS. THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT
MAY BE WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
From its inception on March 27, 1998 to June 30, 1998 Nations Managed
SmallCap Index Portfolio performed extremely well relative to the Standard &
Poor's SmallCap 600 Index.* The Portfolio returned -2.50%, outperforming the
Index by approximately 200 basis points (2%) due mainly to strong stock
selection across the board.
WHY DID THE FUND PERFORM THIS WAY?
First American Financial, an insurance company focused on the mortgage
industry, was a strong leader during the quarter (+83.2%) due to strong
earnings and a favorable response to the company's declaration of a 3-for-1
stock split. Other winners for the Portfolio during the reporting period
included Skywest (+89.5%), ICN Pharmaceuticals (+50.5%), and Vitesse
Semiconductor (+63.6%). Companies that fell victim to the negative small-cap
market included DiMon Inc. (-56.2%), Input/Output Inc. (-40.0%), and
Phycor (-38.7%).**
From an economic sector viewpoint, Nations Managed SmallCap Index Portfolio
added value from stock selection in 11 out of 13 sectors, with the biggest
boost coming from the consumer cyclical and capital goods sectors. The two
sectors in which stock selection was not as successful were the utilities and
consumer staples sectors; however, the underperformance was limited to 3
basis points or less per sector.
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
Valuations for small company stocks are not as inflated as those of their
large-capitalization brethren and their earnings are growing at a faster
clip. Also, their exposure to the looming Asian turmoil, in our view, should
be minimal. We believe the prospects for a rebound in small stocks are
encouraging.
*THE STANDARD &POOR'S SMALLCAP 600 IS AN UNMANAGED,
MARKET-CAPITALIZATION-WEIGHTED INDEX CONSISTING OF 600 COMMON STOCKS. IT IS
UNAVAILABLE FOR INVESTMENT.
** PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE AND MAY NOT BE REPRESENTATIVE OF
CURRENT HOLDINGS.
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER
NATIONS FUNDS PORTFOLIOS.
BECAUSE SMALL COMPANIES HAVE NARROWER MARKETS AND LIMITED FINANCIAL RESOURCES
AND THEIR STOCKS ARE NOT AS WIDELY TRADED AS LARGE COMPANY STOCKS, THEIR
SHARE PRICE WILL BE MORE VOLATILE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS.
<PAGE>
NATIONS
VALUE PORTFOLIO
PORTFOLIO MANAGEMENT
Value Management Team
SHARRON HERRMANN, CFA
JULIE HALE, CFA
MIKE FULGINITI, CFA
MARCUS GRIFFIN, CFA
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$10,390
$9,940
Value Portfolio S&P 500
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
Value Portfolio (0.60%)
S&P 500 3.90%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS VALUE
PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
From its inception on March 27, 1998 through June 30, 1998, Nations Value
Portfolio returned a negative 0.60%.
WHY DID THE FUND PERFORM THIS WAY?
The main contributors to the Portfolio's underperformance compared to the
market (the Standard & Poor's 500 Composite Stock Index)* can be found in the
consumer staples, healthcare and technology sectors of the portfolio. The
strong performing stocks in these sectors are the large capitalization, high
price to earnings multiple growth companies that have led the market upward
over the last several quarters.** Within the value discipline, we generally
do not find these stocks attractive, believe they are fundamentally
overvalued, and the Portfolio is underweighted in these sectors.
Positive contributors to performance were found in the utilities, and
transportation sectors. The Portfolio remains overweighted in the utility
sector as it offers attractive yields (3-4 times the S&P 500 Index yield) and
valuations. This should help cushion the Portfolio should there be a major
downturn in the market. Over the period, the transportation sector produced a
positive 12.4% return, versus the S&P transportation sector decline of
6.4%.***
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
We expect the market to continue in a narrow trading range with a very narrow
group of companies leading the charge. At some point, however, we believe a
market correction will eliminate any excesses. We are some-what cautious at
these levels and would recommend a conservative equity investment strategy in
the short term.
*THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS AN UNMANAGED INDEX
OF 500 WIDELY HELD COMMON STOCKS. IT IS UNAVAILABLE FOR INVESTMENT.
** THE PRICE-TO-EARNINGS MULTIPLE IS CALCULATED BY TAKING A COMPANY'S
12-MONTH EARNINGS PER SHARE AND DIVIDING IT BY THE CURRENT STOCK SHARE
PRICE.
*** PORTFOLIO CHARACTERISTICS ARE SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT CHARACTERISTICS.
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER
NATIONS FUNDS PORTFOLIOS.
<PAGE>
NATIONS MARSICO
GROWTH AND INCOME PORTFOLIO
PORTFOLIO MANAGER
THOMAS F. MARSICO
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$11,270
$10,390
Growth & Income Portfolio S&P 500
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
Growth & Income 12.70%
S&P 500 3.90%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS MARSICO GROWTH
& INCOME PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE
THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
For the period March 27, 1998 through June 30, 1998 the Portfolio provided
shareholders with a return of 12.70%.
WHY DID THE FUND PERFORM THIS WAY?
Virtually all of the Portfolio's investment strategies have been on-target,
including our "bullish" macroeconomic outlook, sector and industry themes and
individual stock selection.
The Portfolio remains completely focused on high quality, large
capitalization companies that have global franchises, are experiencing
positive change, are led by strong management, and have superior earnings
growth potential. In terms of sector and industry exposure, the Portfolio
had substantial allocations in pharmaceuticals and financial services. It
also had significant positions in automotive, retail, and select technology
companies.
During the quarter, a number of individual holdings contributed positively to
results. Standout performers showed price appreciation of 14% or more during
the three-month quarter.
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
In our view, we remain in a "long boom" cycle, one that is characterized by
low inflation, low interest rates, and healthy overall economic growth rates.
All of these factors, in our opinion, augur well for equity returns going
forward. While broad stock market indices are trading at statistically high
valuation levels, we believe strongly that the favorable macroeconomic
environment will provide many excellent investment opportunities.
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER
NATIONS FUNDS PORTFOLIOS.
<PAGE>
NATIONS MARSICO
FOCUSED EQUITIES PORTFOLIO
PORTFOLIO MANAGER
THOMAS F. MARSICO
PERFORMANCE
OVERVIEW
3/27/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$11,470
$10,390
Focused Equity Portfolio S&P 500
Cumulative Returns as of 6/30/98
SINCE INCEPT.
-------------
Focused Equity 14.70%
S&P 500 3.90%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE NATIONS MARSICO FOCUSED
EQUITY PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE
THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
For the period March 27, 1998 through June 30 1998, the Portfolio provided
shareholders with a return of 14.70*.
WHY DID THE FUND PERFORM THIS WAY?
Virtually all of the Portfolio's investment strategies have been on-target,
including our "bullish" macroeconomic outlook, sector and industry themes and
individual stock selection.
The Portfolio remains completely focused on high quality, large
capitalization companies that have global franchises, are experiencing
positive change, are led by strong management, and have superior earnings
growth potential. In terms of sector and industry exposure, the Portfolio
had substantial allocations in pharmaceuticals and financial services. It
also had significant positions in automotive, retail, and select technology
companies.
During the quarter, a number of individual holdings contributed positively to
results. Standout performers showed price appreciation of more than 14% or
more during the three-month quarter.
WHAT IS YOUR OUTLOOK FOR THE REST OF 1998?
In our view, we remain in a "long boom" cycle, one that is characterized by
low inflation, low interest rates, and healthy overall economic growth rates.
All of these factors, in our opinion, augur well for equity returns going
forward. While broad stock market indices are trading at statistically high
valuation levels, we believe strongly that the favorable macroeconomic
environment will provide many excellent investment opportunities.
THE OUTLOOK FOR THIS PORTFOLIO MAY DIFFER FROM THAT PRESENTED FOR OTHER
NATIONS FUNDS PORTFOLIOS.
<PAGE>
HARTFORD
SMALL COMPANY HLS FUND
PORTFOLIO MANAGER
[PHOTO]
MARK S. WATERHOUSE
Vice President
Wellington Management Company, LLP
PERFORMANCE
OVERVIEW
4/1/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$9,686
$9,534
Small Company Fund Russell 2000
CUMULATIVE RETURNS as of 6/30/98
SINCE INCEPT.
-------------
Small Company (3.14%)
Russell 2000 (4.66%)
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE SMALL COMPANY HLS FUND
(THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF
THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR
LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
The Hartford Small Company HLS Fund outperformed its Lipper peer group from
its inception through June 30, 1998. The Fund returned -3.14% versus -4.02%
for the Lipper Small Company VA-UF Average.
WHY DID THE FUND PERFORM THIS WAY?
A theme that has been present for the past year continued; investors want
exposure to the US market but they also want liquidity due to the fear of a
slowdown is the US economy. As a result, large capitalization stocks have
dramatically outperformed smaller names. Nonetheless, the stock selections
made in the Fund focused on companies with strong fundamentals, such as THE
LEARNING COMPANY, and ADC TELECOMMUNICATIONS, and have resulted in
competitive relative performance.
WHAT IS YOUR OUTLOOK FOR
THE REST OF 1998?
The US economy remains healthy, led by strong consumer demand. However, a
widening trade gap, a strong US dollar, and continued weakness in the Asian
economies should result in a slowing of the economy in 1999. In this
environment, we believe that winners will be in the energy and technology
stocks. As such, we will try to opportunistically increase the Fund's
exposure to these areas. In terms of stock selection, we will try to find
great small companies and buy them below their intrinsic value.
<PAGE>
HARTFORD
CAPITAL APPRECIATION HLS FUND
PORTFOLIO MANAGER
[PHOTO]
SAUL J. PANNELL, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE
OVERVIEW
4/1/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$10,332
$9,912
Capital Appreciation Fund S&P 500
CUMULATIVE RETURNS as of 6/30/98
SINCE INCEPT.
-------------
Capital Appreciation (0.88%)
S&P 500 3.32%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE CAPITAL APPRECIATION
HLS FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
The Hartford Capital Appreciation HLS Fund underperformed its Lipper peer
group from its inception through June 30, 1998. The Fund returned -0.88%
versus 1.84% for the Lipper Capital Appreciation VA-UF Average.
WHY DID THE FUND PERFORM THIS WAY?
We began the year by finding gains in a handful of companies across sectors
such as finance, telecommunications and retail, and by reducing our overall
foreign stock exposure in light of the Asian crisis. As we moved into the
second quarter, large cap growth was clearly the place to be in the US equity
market. The S&P 500 Index exceeded the Russell 2000 Index by a whopping 8
percent and within the large cap sector, growth stocks outperformed value by
over 4 percent. The Fund's performance was negatively impacted by a
combination of factors including 1) an emphasis on smaller companies, 2) a
tilt toward value versus growth, and 3) tactical security selection bets that
went against us. Strong performers over the six month period included
AMERICA ONLINE and THE LEARNING COMPANY.
WHAT IS YOUR OUTLOOK FOR
THE REST OF 1998?
Our overall strategy for the Fund remains duel faceted. We maintain an
emphasis on smaller companies with dynamic earnings growth prospects, and
couple that with an opportunistic trading approach to larger cap stocks where
we typically see a catalyst for outperformance. Following a period of
underperformance as we now have experienced, the temptation is to alter the
Fund's approach by moving closer to the large cap growth paradigm which has
dominated the US equity market over the past year. In our view, however, the
real risk now is to chase what worked yesterday and be poorly positioned for
a positioned rebound in small and mid cap stocks.
<PAGE>
HARTFORD
INTERNATIONAL OPPORTUNITIES HLS FUND
LEAD PORTFOLIO MANAGER
[PHOTO]
TROND SKRAMSTAD
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE
OVERVIEW
4/1/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$10,390
$10,312
International Opportunities EAFE GDP
Fund
CUMULATIVE RETURNS as of 6/30/98
SINCE INCEPT.
-------------
Int'l Opportunities 3.12%
EAFE GDP 3.90%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE INTERNATIONAL
OPPORTUNITIES HLS FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT
EXCLUDE THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS. THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT
MAY BE WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
The Hartford International Opportunities HLS Fund outperformed its Lipper
peer group from its inception through June 30, 1998. The Fund returned 3.12%
versus 1.37% for the Lipper International VA-UF Average.
WHY DID THE FUND PERFORM THIS WAY?
Overall, Europe showed strong performance and the Fund continued to benefit
as a result of its large, overweight position in that region. Also a benefit
was our underweight position in Asia where virtually every market in the
region took a turn for the worse after having seen a short but unsustainable
bounce at the beginning of the year.
WHAT IS YOUR OUTLOOK FOR
THE REST OF 1998?
Europe remains the Fund's major area of exposure, and Japan remains the area
that is most significantly underweighted versus international benchmarks. In
all markets, we take a "fundamental research" approach, seeking stocks that
are attractively valued relative to their long-term prospects for growth. We
continue to feel that Europe shows the most promise for continued economic
growth and profit improvement. While there are many companies in Japan and
the rest of the Asia Pacific region that are attractively valued relative to
companies in other regions, we do not believe that the region has turned the
corner yet and feel that the investment risks outweigh the prospective
rewards at this time.
<PAGE>
HARTFORD
STOCK HLS FUND
PORTFOLIO MANAGER
[PHOTO]
RAND L. ALEXANDER, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE
OVERVIEW
4/1/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$10,545
$10,332
Stock Fund S&P 500
CUMULATIVE RETURNS as of 6/30/98
SINCE INCEPT.
-------------
Stock 5.45%
S&P 500 3.32%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE STOCK HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
The Hartford Stock HLS Fund outperformed its Lipper peer group from its
inception through June 30, 1998. The Fund provided a total return of 5.45%
versus 2.42% for the Lipper Growth VA-UF Average.
WHY DID THE FUND PERFORM THIS WAY?
Overall, the Fund's performance over the last six month period was helped by
favorable sector weightings and strong stock selection. We continued to
emphasize predictable growth companies where results would not be seriously
damaged by the slowdown in the Pacific Rim. Our emphasis on less cyclical
companies in areas such as health care and household products, and our
overweights in financials and technology, continued to produce good results
through the first half of 1998.
WHAT IS YOUR OUTLOOK FOR
THE REST OF 1998?
While concerns have surfaced about valuations as a result of the strong
performance of the US equity market during the first half of the year, we
continue to remain optimistic about the outlook. The economy seems to be
slowing at just the right time to prevent the Fed from raising interest
rates. Employment levels are extremely favorable. Inflation remains low and
well under control. US consumers are benefiting from lower priced Asian
imports, low interest rates and falling commodity prices. The Federal budget
is in surplus. US companies are gaining access to areas of the world that
promise excellent earnings growth over time. Mutual fund cash flows remain
strong. The bond market has started to provide support for higher multiples
as yields move lower. While this may all sound too good to be true, the fact
is that it is true and we see no reason why this should change anytime soon.
<PAGE>
HARTFORD
DIVIDEND AND GROWTH HLS FUND
PORTFOLIO MANAGER
[PHOTO]
LAURIE A. GABRIEL, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE
OVERVIEW
4/1/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$10.332
$9,923
Dividend & Growth Fund S&P 500
CUMULATIVE RETURNS as of 6/30/98
SINCE INCEPT.
-------------
Dividend & Growth (0.77%)
S&P 500 3.32%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE DIVIDEND AND GROWTH HLS
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF
THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR
LESS THAN THE ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
The Hartford Dividend and Growth HLS Fund underperformed its Lipper peer
group from its inception through June 30, 1998. The Fund provided a total
return of -0.77% versus -0.13% for the Lipper Equity Income VA-UF Average.
WHY DID THE FUND PERFORM THIS WAY?
The health care industry was an area of strength for the Fund due to positive
stock selection, with strong performance from names such as Warner-Lambert
and American Home Products. The finance sector was initially a drag on
performance at the beginning of the year, yet CITICORP ultimately helped
performance, as did MARSH & MCLELLAN. During the second quarter, large
capitalization stocks outperformed small cap stocks by almost 8% and growth
outperformed value by more than 4%. Therefore, the Fund's large
capitalization focus was a positive, while the strength in growth-oriented
securities was a detriment given our value orientation.
WHAT IS YOUR OUTLOOK FOR
THE REST OF 1998?
Broad diversification across economic sectors is an ongoing part of the
Fund's approach. Since our focus is on stock selection, the sector
representation will be fairly stable over time. The competitive pricing
environment brought on by the deteriorating economic conditions in Asia and
the rising US dollar exchange rate should ensure a very low inflation rate
for the year. As a result, we believe the Fund is well-positioned going
forward given its emphasis on less cyclical companies in areas such as health
care and household products with above-average yields, below average
price-to-earnings ratios and risk.
<PAGE>
HARTFORD
ADVISERS HLS FUND
PORTFOLIO MANAGERS
[PHOTO]
RAND L. ALEXANDER, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
[PHOTO]
PAUL D. KAPLAN
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE
OVERVIEW
4/1/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
[CHART]
$10,543
$10,332
$10,262
Advisers Fund S&P 500 Lehman Govt/Corp
CUMULATIVE RETURNS as of 6/30/98
SINCE INCEPT.
-------------
Advisers 4.44%
S&P 500 3.32%
Lehman Govt/Corp 2.62%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE ADVISERS HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
The Hartford Advisers HLS Fund outperformed its Lipper peer group from its
inception through June 30, 1998. The Fund provided a total return of 4.44%
versus 1.21% for the Lipper Flexible VA-UF Average.
WHY DID THE FUND PERFORM THIS WAY?
The reasons for the strong performance of the Fund relative to competitors
for the six month period are twofold. First, the equity portion of the Fund
has achieved significantly greater total return than the competition and,
second, the Fund's equity ratio has been high during a period of strong
equity markets. Although the bond portion of the Fund has performed well,
the keys to performance have been in the equity portion and in the asset
allocation (63% stocks, 33% bonds and 4% cash as of 6/30/98).
WHAT IS YOUR OUTLOOK FOR
THE REST OF 1998?
We have felt for some time that the direction of bond yields was downward,
and we have positioned the Fund's fixed income portfolio with
longer-than-benchmark duration in order to take advantage of any interest
rate decline. In addition, we have limited our holdings of mortgage-backed
securities and corporate bonds given their stretched valuations. While
concerns have surfaced about valuations as a result of the strong performance
of the US equity market during the first half of the year, we continue to
remain optimistic about the outlook. Given the economic environment with low
inflation, low interest rates, and reasonable economic growth, we see little
reason to reduce the Funds' equity ratio. The bull market has been a long
one, but we remain comfortable with an equity ratio in the area of 62%. We
continue to prefer bonds to cash and are therefore keeping the Funds' cash
commitment quite low.
<PAGE>
HARTFORD
BOND HLS FUND
PORTFOLIO MANAGER
[PHOTO]
ALISON D. GRANGER, CFA
Senior Vice President
The Hartford Investment
Management Company (HIMCO)
PERFORMANCE
OVERVIEW
4/1/98 - 6/30/98
GROWTH OF A $10,000 INVESTMENT.
$10,262
$10,241
Bond Income Strategy Fund Lehman
Govt/Corp
CUMULATIVE RETURNS as of 6/30/98
SINCE INCEPT.
Bond Income Strategy
2.41%
Lehman Govt/Corp
2.62%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE BOND HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
HOW DID THE FUND PERFORM?
The Hartford Bond HLS Fund outperformed its Lipper peer group from its
inception through June 30, 1998. The Fund provided a total return of 2.41%
versus 2.28% for the Lipper Corporate Debt "BBB" average.
WHY DID THE FUND PERFORM THIS WAY?
There were two major factors that contributed to the fund's performance this
quarter. The first was the Fund's duration of 6.1 years which was
approximately 13% longer than its benchmark index. Yields declined between
20 and 30 basis points during the quarter in ten-year and longer- maturity
Treasuries, resulting in price gains. High quality long-maturity corporate
securities also benefited. The Fund's overweighted position in these
securities contributed positively to returns. The second was the Fund's
allocation to BB rated domestic high yield and emerging market issues. The
combination of huge new issue supply in the domestic high yield market and
Asian-induced weakness in the Emerging Markets resulted in underperformance
of these securities relative to higher quality alternatives. We began the
quarter with an underweighted position in these assets and gradually
increased the portfolio allocation to an overweighted position at the end of
the second quarter, as attractive values emerged. Second quarter
performance, however, was impacted by this allocation.
WHAT IS YOUR OUTLOOK FOR
THE REST OF 1998?
High inflation-adjusted Treasury yields, the continued perceived safety of US
investments amidst recent global volatility, and the improving deficit
situation, all contribute to our expectation that Treasury securities will
continue to perform well over the course of 1998. We have added a position
in Treasury Inflation Protected Securities in to our belief that these
securities are fundamentally inexpensive, and could significantly outperform
other fixed income assets (of any quality) in the event that inflation
emerges and/or real Treasury yields decline. We continue to hold a portfolio
of high average quality in order to express our view that US Treasuries
provide one of the most attractive risk/reward profiles among the taxable
fixed income asset classes. The second quarter increase in allocation to
high yield securities will provide our shareholders with additional yield,
but it is also our expectation that these securities will perform well in the
near term. Finally, we continue to find value in fifteen-year discount
mortgage passthroughs, such as FNMA Dwarf 6s, to provide additional yield,
limit risk of a significant rise in prepayments, and enhance portfolio
diversification.
<PAGE>
Performance Summary of Hartford HLS Mutual Funds
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUNDS
TOTAL RETURNS FOR THE YEAR ENDED DECEMBER 31,
1998(A) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Fund.......... 21.36% 31.38% 24.37% 34.10% (1.89)% 14.34% 10.04% 24.58% (3.87)% 26.02% 19.00% 5.41% 12.33%
Bond Fund........... 4.28 11.35 3.52 18.49 (3.95) 10.24 5.53 16.43 8.39 12.10 7.60 (0.01) 12.19
Money Market Fund... 2.63 5.31 5.19 5.74 3.95 2.94 3.63 6.01 8.09 9.10 7.40 6.49 6.77
Advisers Fund....... 15.44 24.51 16.59 28.34 (2.74) 12.25 8.30 20.33 1.26 21.72 14.24 6.08 12.70
Capital Appreciation
Fund............... 11.82 22.34 20.70 30.25 2.50 20.80 16.98 53.99 (10.90) 24.11 26.37 (4.31) 9.03
Mortgage Securities
Fund............... 3.35 9.01 5.07 16.17 (1.61) 6.31 4.64 14.71 9.70 13.13 8.38 2.64 11.13
Index Fund.......... 17.46 32.61 22.09 36.55 0.94 9.12 6.82 29.53 (3.99) 30.47 16.35 (12.91)* --
International
Opportunities
Fund............... 16.73 0.34 12.93 13.93 (1.94) 33.73 (4.43) 13.00 (11.76)* -- -- -- --
Dividend and Growth
Fund............... 10.93 31.89 22.91 36.37 1.96* -- -- -- -- -- -- -- --
International
Advisers Fund...... 12.67 5.52 11.79 15.84* -- -- -- -- -- -- -- -- --
Small Company
Fund............... 8.89 18.38 7.15* -- -- -- -- -- -- -- -- -- --
MidCap Fund......... 17.64 13.81* -- -- -- -- -- -- -- -- -- -- --
Growth & Income
Fund............... 4.06* -- -- -- -- -- -- -- -- -- -- -- --
MARKET INDICES
Standard & Poor's
500 Stock Index.... 17.70% 33.35% 22.95% 37.52% 1.31% 10.06% 7.61% 30.39% (3.11)% 31.62% 16.60% 5.49% 18.66%
Standard & Poor's
400 Stock Index
(MidCap)........... 8.63 32.25 19.18 30.88 (3,59) 11.03 7.58 16.13 8.28 14.24 7.58 2.29 15.62
Shearson Lehman
Government/Corporate
Bond Index......... 4.17 9.76 2.90 19.24 (3.51) 11.03 7.58 16.13 8.28 14.24 7.58 2.29 15.62
90-Day Treasury
Bills.............. 2.56 5.33 5.29 5.80 4.14 3.12 3.70 5.90 7.95 8.67 6.56 5.97 6.41
EAFEGDP............. 21.88 5.77 7.63 11.16 7.81 33.56 (9.65) 10.73 -- -- -- -- --
Frank Russell 2000
Index.............. 4.93 22.38 16.51 28.45 (1.82) 18.71 18.41 46.04 (19.48) 16.26 25.02 (8.80) 5.68
Frank Russell 2500
Index.............. 5.66 24.43 19.04 31.70 (1.07) 16.54 16.18 46.69 (14.88) 19.43 21.39 1.75 12.62
Shearson Lehman
Brothers Mortgage
Backed Bond
Index.............. 3.38 9.49 5.35 16.80 (1.61) 6.84 8.96 15.72 10.72 15.35 8.55 2.81 --
<CAPTION>
FUNDS
1985
<S> <C>
Stock Fund.......... 31.49%
Bond Fund........... 20.62
Money Market Fund... 8.53
Advisers Fund....... 26.85
Capital Appreciation
Fund............... 36.18
Mortgage Securities
Fund............... 20.61
Index Fund.......... --
International
Opportunities
Fund............... --
Dividend and Growth
Fund............... --
International
Advisers Fund...... --
Small Company
Fund............... --
MidCap Fund......... --
Growth & Income
Fund............... --
MARKET INDICES
Standard & Poor's
500 Stock Index.... 31.70%
Standard & Poor's
400 Stock Index
(MidCap)........... 21.30
Shearson Lehman
Government/Corporate
Bond Index......... 21.30
90-Day Treasury
Bills.............. 7.97
EAFEGDP............. --
Frank Russell 2000
Index.............. 31.04
Frank Russell 2500
Index.............. --
Shearson Lehman
Brothers Mortgage
Backed Bond
Index.............. --
</TABLE>
(a) For the six months ended June 30, 1998.
* The inception dates of the Funds are as follows: Stock and Bond--August 31,
1977, HVA Money Market--June 30, 1980, Advisers--March 31, 1983, Capital
Appreciation--April 2, 1984, Mortgage Securities--January 1, 1985, Index--May
1, 1987, International Opportunities--July 2, 1990, Dividend and Growth--March
8, 1994, International Advisers--March 1, 1995, Small Company--August 9, 1996,
MidCap--July 15, 1997 and Growth & Income--May 29, 1998.
The performance figures for mutual funds do not include insurance charges that
are included in the unit values of individual plans.
Total return consists of any change in the market price of securities owned by
the various mutual funds, as well as income from dividends or interest.
Calculations assume reinvestment of income. Performance figures represent past
results and are not a guarantee of future performance. An investor's unit,
when redeemed, may be worth more or less than the original cost. Results do
not take into account personal income taxes and capital gains where
applicable. Market indices are included as a broad measure of market
performance, and no direct comparison with the Funds is intended.
16
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONS NATIONS
BALANCED DISCIPLINED
ASSETS PORTFOLIO EQUITY PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
---------------- ----------------
<S> <C> <C>
ASSETS:
Investments:
Nations Balanced Assets
Portfolio
Shares 48,298
Cost $ 478,306
Market Value......... $ 472,837 --
Nations Disciplined
Equity Portfolio
Shares 135,586
Cost $1,364,538
Market Value......... -- $1,376,197
Nations International
Growth Portfolio
Shares 37,999
Cost $ 384,146
Market Value......... -- --
Nations Managed Index
Portfolio
Shares 121,516
Cost $1,232,620
Market Value......... -- --
Nations Managed
SmallCap Index
Portfolio
Shares 62,052
Cost $ 615,065
Market Value......... -- --
Nations Value Portfolio
Shares 152,595
Cost $1,527,177
Market Value......... -- --
Nations Marisco Growth
& Income Portfolio
Shares 249,774
Cost $2,671,347
Market Value......... -- --
Nations Marisco Focused
Equities Portfolio
Shares 395,165
Cost $4,286,194
Market Value......... -- --
Due from Hartford Life
Insurance Company.... 1,577 29,841
Receivable from fund
shares sold.......... -- --
---------------- ----------------
Total Assets........... 474,414 1,406,038
---------------- ----------------
LIABILITIES
Due to Hartford Life
Insurance Company.... -- --
Payable for fund shares
purchased............ 1,577 29,842
---------------- ----------------
Total Liabilities...... 1,577 29,842
---------------- ----------------
Net Assets (variable
annuity contract
liabilities)......... $ 472,837 $1,376,196
---------------- ----------------
---------------- ----------------
Units Owned by
Participants......... 483,986 1,353,243
Unit Price............. $0.976964 $ 1.016962
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
<TABLE>
<CAPTION>
NATIONS
NATIONS MANAGED NATIONS MANAGED NATIONS MARISCO
INTERNATIONAL INDEX SMALLCAP NATIONS GROWTH &
GROWTH PORTFOLIO PORTFOLIO INDEX PORTFOLIO VALUE PORTFOLIO INCOME PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------- -------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Nations Balanced Assets
Portfolio
Shares 48,298
Cost $ 478,306
Market Value......... -- -- -- -- --
Nations Disciplined
Equity Portfolio
Shares 135,586
Cost $1,364,538
Market Value......... -- -- -- -- --
Nations International
Growth Portfolio
Shares 37,999
Cost $ 384,146
Market Value......... $ 387,211 -- -- -- --
Nations Managed Index
Portfolio
Shares 121,516
Cost $1,232,620
Market Value......... -- $1,254,041 -- -- --
Nations Managed
SmallCap Index
Portfolio
Shares 62,052
Cost $ 615,065
Market Value......... -- -- $ 605,012 -- --
Nations Value Portfolio
Shares 152,595
Cost $1,527,177
Market Value......... -- -- -- $1,516,797 --
Nations Marisco Growth
& Income Portfolio
Shares 249,774
Cost $2,671,347
Market Value......... -- -- -- -- $2,814,949
Nations Marisco Focused
Equities Portfolio
Shares 395,165
Cost $4,286,194
Market Value......... -- -- -- -- --
Due from Hartford Life
Insurance Company.... -- 592 -- 4,920 94,635
Receivable from fund
shares sold.......... 13 -- 82 -- --
---------------- -------------- --------------- --------------- ----------------
Total Assets........... 387,224 1,254,633 605,094 1,521,717 2,909,584
---------------- -------------- --------------- --------------- ----------------
LIABILITIES
Due to Hartford Life
Insurance Company.... 13 -- 82 -- --
Payable for fund shares
purchased............ -- 592 -- 4,919 94,634
---------------- -------------- --------------- --------------- ----------------
Total Liabilities...... 13 592 82 4,919 94,634
---------------- -------------- --------------- --------------- ----------------
Net Assets (variable
annuity contract
liabilities)......... $ 387,211 $1,254,041 $ 605,012 $1,516,798 $2,814,950
---------------- -------------- --------------- --------------- ----------------
---------------- -------------- --------------- --------------- ----------------
Units Owned by
Participants......... 377,731 1,227,478 631,154 1,533,728 2,532,995
Unit Price............. $1.025097 $ 1.021640 $0.958580 $ 0.988962 $ 1.111313
<CAPTION>
NATIONS MARISCO
FOCUSED
EQUITIES PORTFOLIO
SUB-ACCOUNT
------------------
<S> <C>
ASSETS:
Investments:
Nations Balanced Assets
Portfolio
Shares 48,298
Cost $ 478,306
Market Value......... --
Nations Disciplined
Equity Portfolio
Shares 135,586
Cost $1,364,538
Market Value......... --
Nations International
Growth Portfolio
Shares 37,999
Cost $ 384,146
Market Value......... --
Nations Managed Index
Portfolio
Shares 121,516
Cost $1,232,620
Market Value......... --
Nations Managed
SmallCap Index
Portfolio
Shares 62,052
Cost $ 615,065
Market Value......... --
Nations Value Portfolio
Shares 152,595
Cost $1,527,177
Market Value......... --
Nations Marisco Growth
& Income Portfolio
Shares 249,774
Cost $2,671,347
Market Value......... --
Nations Marisco Focused
Equities Portfolio
Shares 395,165
Cost $4,286,194
Market Value......... $4,532,548
Due from Hartford Life
Insurance Company.... 89,179
Receivable from fund
shares sold.......... --
------------------
Total Assets........... 4,621,727
------------------
LIABILITIES
Due to Hartford Life
Insurance Company.... --
Payable for fund shares
purchased............ 89,181
------------------
Total Liabilities...... 89,181
------------------
Net Assets (variable
annuity contract
liabilities)......... $4,532,546
------------------
------------------
Units Owned by
Participants......... 4,027,305
Unit Price............. $ 1.125454
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
BOND STOCK
CLASS B FUND CLASS B FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund,
Inc.
Shares 1,134,461
Cost $1,145,338
Market Value......... $1,159,350 --
Hartford Stock HLS
Fund, Inc.
Shares 1,993,540
Cost $2,022,166
Market Value......... -- $2,084,654
Hartford Money Market
HLS Fund, Inc.
Shares 387,955
Cost $ 387,955
Market Value......... -- --
Hartford Advisers HLS
Fund, Inc.
Shares 6,105,427
Cost $6,162,536
Market Value......... -- --
Hartford Capital
Appreciation HLS
Fund, Inc.
Shares 1,873,842
Cost $1,844,001
Market Value......... -- --
Hartford International
Opportunities HLS
Fund, Inc.
Shares 278,270
Cost $ 283,072
Market Value......... -- --
Hartford Dividend
Growth HLS Fund, Inc.
Shares 2,846,412
Cost $2,808,813
Market Value......... -- --
Hartford Small Company
HLS Fund, Inc.
Shares 258,346
Cost $ 249,261
Market Value......... -- --
Due from Hartford Life
Insurance Company...... 35,362 69,881
Receivable from fund
shares sold............ -- --
------------ ------------
Total Assets............. 1,194,712 2,154,535
------------ ------------
LIABILITIES
Due to Hartford Life
Insurance Company...... -- --
Payable for fund shares
purchased.............. 35,362 69,880
------------ ------------
Total Liabilities........ 35,362 69,880
------------ ------------
Net Assets (variable
annuity contract
liabilities)........... $1,159,350 $2,084,655
------------ ------------
------------ ------------
Units Owned by
Participants........... 1,137,960 1,999,715
Unit Price............... $1.018797 $ 1.042476
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
<TABLE>
<CAPTION>
HARTFORD
HARTFORD HARTFORD HARTFORD CAPITAL INTERNATIONAL HARTFORD HARTFORD
MONEY MARKET ADVISERS APPRECIATION OPPORTUNITIES DIVIDEND GROWTH SMALL COMPANY
CLASS B FUND CLASS B FUND CLASS B FUND CLASS B FUND CLASS B FUND CLASS B FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ----------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund,
Inc.
Shares 1,134,461
Cost $1,145,338
Market Value......... -- -- -- -- -- --
Hartford Stock HLS
Fund, Inc.
Shares 1,993,540
Cost $2,022,166
Market Value......... -- -- -- -- -- --
Hartford Money Market
HLS Fund, Inc.
Shares 387,955
Cost $ 387,955
Market Value......... $ 387,955 -- -- -- -- --
Hartford Advisers HLS
Fund, Inc.
Shares 6,105,427
Cost $6,162,536
Market Value......... -- $6,336,139 -- -- -- --
Hartford Capital
Appreciation HLS
Fund, Inc.
Shares 1,873,842
Cost $1,844,001
Market Value......... -- -- $1,846,079 -- -- --
Hartford International
Opportunities HLS
Fund, Inc.
Shares 278,270
Cost $ 283,072
Market Value......... -- -- -- $ 284,057 -- --
Hartford Dividend
Growth HLS Fund, Inc.
Shares 2,846,412
Cost $2,808,813
Market Value......... -- -- -- -- $2,814,461 --
Hartford Small Company
HLS Fund, Inc.
Shares 258,346
Cost $ 249,261
Market Value......... -- -- -- -- -- $ 248,950
Due from Hartford Life
Insurance Company...... 1,060 65,644 52,882 6,625 115,125 --
Receivable from fund
shares sold............ -- -- -- -- -- 8
------------ ------------ ----------------- ------------- --------------- -------------
Total Assets............. 389,015 6,401,783 1,898,961 290,682 2,929,586 248,958
------------ ------------ ----------------- ------------- --------------- -------------
LIABILITIES
Due to Hartford Life
Insurance Company...... -- -- -- -- -- 9
Payable for fund shares
purchased.............. 1,060 65,643 52,882 6,625 115,125 --
------------ ------------ ----------------- ------------- --------------- -------------
Total Liabilities........ 1,060 65,643 52,882 6,625 115,125 9
------------ ------------ ----------------- ------------- --------------- -------------
Net Assets (variable
annuity contract
liabilities)........... $ 387,955 $6,336,140 $1,846,079 $ 284,057 $2,814,461 $ 248,949
------------ ------------ ----------------- ------------- --------------- -------------
------------ ------------ ----------------- ------------- --------------- -------------
Units Owned by
Participants........... 384,352 6,124,277 1,879,622 279,129 2,855,231 259,143
Unit Price............... $1.009373 $ 1.034594 $0.982154 $ 1.017657 $ 0.985721 $ 0.960663
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION, APRIL 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONS NATIONS
BALANCED DISCIPLINED
ASSETS PORTFOLIO EQUITY PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
---------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $-- $--
EXPENSES:
Mortality and expense
undertakings......... (538) (1,738)
------- -------
Net investment income
(loss)............. (538) (1,738)
------- -------
CAPITAL GAINS INCOME..... -- --
------- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... -- (1)
Net unrealized
appreciation
(depreciation) of
investments during
the period........... (5,469) 11,659
------- -------
Net gain (loss) on
investments........ (5,469) 11,658
------- -------
Net increase
(decrease) in net
assets resulting
from operations.... $(6,007) $ 9,920
------- -------
------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
<TABLE>
<CAPTION>
NATIONS MARISCO
NATIONS NATIONS NATIONS MANAGED GROWTH &
INTERNATIONAL MANAGED SMALLCAP NATIONS INCOME
GROWTH PORTFOLIO INDEX PORTFOLIO INDEX PORTFOLIO VALUE PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. -$- $-- $-- $-- $--
EXPENSES:
Mortality and expense
undertakings......... (585) (1,670) (990) (2,276) (3,180)
------ ------- --------------- --------------- ---------------
Net investment income
(loss)............. (585) (1,670) (990) (2,276) (3,180)
------ ------- --------------- --------------- ---------------
CAPITAL GAINS INCOME..... -- -- -- -- --
------ ------- --------------- --------------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... -- (2) 1 1 21
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 3,065 21,420 (10,054) (10,379) 143,602
------ ------- --------------- --------------- ---------------
Net gain (loss) on
investments........ 3,065 21,418 (10,053) (10,378) 143,623
------ ------- --------------- --------------- ---------------
Net increase
(decrease) in net
assets resulting
from operations.... $2,480 $19,748 $(11,043) $(12,654) $140,443
------ ------- --------------- --------------- ---------------
------ ------- --------------- --------------- ---------------
<CAPTION>
NATIONS MARISCO
FOCUSED
EQUITIES PORTFOLIO
SUB-ACCOUNT
------------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $--
EXPENSES:
Mortality and expense
undertakings......... (5,625)
--------
Net investment income
(loss)............. (5,625)
--------
CAPITAL GAINS INCOME..... --
--------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... --
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 246,353
--------
Net gain (loss) on
investments........ 246,353
--------
Net increase
(decrease) in net
assets resulting
from operations.... $240,728
--------
--------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION, APRIL 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
BOND STOCK
CLASS B FUND CLASS B FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $-- $--
EXPENSES:
Mortality and expense
undertakings......... (1,516) (2,438)
------------ ------------
Net investment income
(loss).............. (1,516) (2,438)
------------ ------------
CAPITAL GAINS INCOME..... -- --
------------ ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... 18 --
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 14,011 62,489
------------ ------------
Net gain (loss) on
investments......... 14,029 62,489
------------ ------------
Net increase
(decrease) in net
assets resulting
from operations..... $12,513 $60,051
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
24
<PAGE>
<TABLE>
<CAPTION>
HARTFORD
HARTFORD HARTFORD HARTFORD CAPITAL INTERNATIONAL HARTFORD HARTFORD
MONEY MARKET ADVISERS APPRECIATION OPPORTUNITIES DIVIDEND GROWTH SMALL COMPANY
CLASS B FUND CLASS B FUND CLASS B FUND CLASS B FUND CLASS B FUND CLASS B FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $3,075 $ -- $ -- $-- $-- $ --
EXPENSES:
Mortality and expense
undertakings......... (764) (8,561) (2,371) (324) (3,789) (273)
------ ------------ ------- ------ ------- -----
Net investment income
(loss).............. 2,311 (8,561) (2,371) (324) (3,789) (273)
------ ------------ ------- ------ ------- -----
CAPITAL GAINS INCOME..... -- -- -- -- -- --
------ ------------ ------- ------ ------- -----
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... -- 1,124 -- 15 -- (2)
Net unrealized
appreciation
(depreciation) of
investments during
the period........... -- 173,603 2,078 985 5,648 (312)
------ ------------ ------- ------ ------- -----
Net gain (loss) on
investments......... -- 174,727 2,078 1,000 5,648 (314)
------ ------------ ------- ------ ------- -----
Net increase
(decrease) in net
assets resulting
from operations..... $2,311 $166,166 $ (293) $ 676 $ 1,859 $(587)
------ ------------ ------- ------ ------- -----
------ ------------ ------- ------ ------- -----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
25
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, APRIL 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONS NATIONS
BALANCED DISCIPLINED
ASSETS PORTFOLIO EQUITY PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)............... $ (538) $ (1,738)
Net realized gain
(loss) on security
transactions......... -- (1)
Net unrealized
appreciation
(depreciation) of
investments during
the period........... (5,469) 11,659
-------- ----------------
Net increase (decrease)
in net assets
resulting from
operations........... (6,007) 9,920
-------- ----------------
UNIT TRANSACTIONS:
Purchases.............. 337,049 1,175,793
Net transfers.......... 142,094 192,131
Surrenders............. (299) (1,648)
-------- ----------------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 478,844 1,366,276
-------- ----------------
Total increase
(decrease) in net
assets............... 472,837 1,376,196
NET ASSETS:
Beginning of period.... -- --
-------- ----------------
End of period.......... $472,837 $1,376,196
-------- ----------------
-------- ----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
26
<PAGE>
<TABLE>
<CAPTION>
NATIONS MARISCO
NATIONS NATIONS NATIONS MANAGED GROWTH &
INTERNATIONAL MANAGED SMALLCAP INDEX NATIONS INCOME
GROWTH PORTFOLIO INDEX PORTFOLIO PORTFOLIO VALUE PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)............... $ (585) $ (1,670) $ (990) $ (2,276) $ (3,180)
Net realized gain
(loss) on security
transactions......... -- (2) 1 1 21
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 3,065 21,420 (10,054) (10,379) 143,602
-------- ---------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations........... 2,480 19,748 (11,043) (12,654) 140,443
-------- ---------------- --------------- --------------- ---------------
UNIT TRANSACTIONS:
Purchases.............. 333,754 1,127,007 560,890 1,398,126 2,356,238
Net transfers.......... 52,139 105,671 56,539 133,287 318,373
Surrenders............. (1,162) 1,615 (1,374) (1,961) (104)
-------- ---------------- --------------- --------------- ---------------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 384,731 1,234,293 616,055 1,529,452 2,674,507
-------- ---------------- --------------- --------------- ---------------
Total increase
(decrease) in net
assets............... 387,211 1,254,041 605,012 1,516,798 2,814,950
NET ASSETS:
Beginning of period.... -- -- -- -- --
-------- ---------------- --------------- --------------- ---------------
End of period.......... $387,211 $1,254,041 $605,012 $1,516,798 $2,814,950
-------- ---------------- --------------- --------------- ---------------
-------- ---------------- --------------- --------------- ---------------
<CAPTION>
NATIONS MARISCO
FOCUSED EQUITIES
PORTFOLIO
SUB-ACCOUNT
------------------
<S> <C>
OPERATIONS:
Net investment income
(loss)............... $ (5,625)
Net realized gain
(loss) on security
transactions......... --
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 246,353
------------------
Net increase (decrease)
in net assets
resulting from
operations........... 240,728
------------------
UNIT TRANSACTIONS:
Purchases.............. 3,954,873
Net transfers.......... 344,182
Surrenders............. (7,237)
------------------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 4,291,818
------------------
Total increase
(decrease) in net
assets............... 4,532,546
NET ASSETS:
Beginning of period.... --
------------------
End of period.......... $4,532,546
------------------
------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
27
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, APRIL 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
BOND STOCK
CLASS B FUND CLASS B FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)............... $ (1,516) $ (2,438)
Net realized gain
(loss) on security
transactions......... 18 --
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 14,011 62,489
------------ ------------
Net increase (decrease)
in net assets
resulting from
operations........... 12,513 60,051
------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 787,777 1,856,218
Net transfers.......... 360,123 167,671
Surrenders............. (1,063) 715
------------ ------------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 1,146,837 2,024,604
------------ ------------
Total increase
(decrease) in net
assets............... 1,159,350 2,084,655
NET ASSETS:
Beginning of period.... -- --
------------ ------------
End of period.......... $1,159,350 $2,084,655
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
28
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
INTERNATIONAL SMALL
HARTFORD HARTFORD HARTFORD CAPITAL OPPORTUNITIES HARTFORD COMPANY
MONEY MARKET ADVISERS APPRECIATION CLASS B DIVIDEND GROWTH CLASS B
CLASS B FUND CLASS B FUND CLASS B FUND FUND CLASS B FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ -------------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)............... $ 2,311 $ (8,561) $ (2,371) $ (324) $ (3,789) $ (273)
Net realized gain
(loss) on security
transactions......... -- 1,124 -- 15 -- (2)
Net unrealized
appreciation
(depreciation) of
investments during
the period........... -- 173,603 2,078 985 5,648 (312)
------------ ------------ ----------- ----------- --------------- -----------
Net increase (decrease)
in net assets
resulting from
operations........... 2,311 166,166 (293) 676 1,859 (587)
------------ ------------ ----------- ----------- --------------- -----------
UNIT TRANSACTIONS:
Purchases.............. 448,764 5,802,994 1,688,859 252,807 2,696,290 225,595
Net transfers.......... (63,121) 385,035 158,546 30,598 120,651 24,211
Surrenders............. 1 (18,055) (1,033) (24) (4,339) (270)
------------ ------------ ----------- ----------- --------------- -----------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 385,644 6,169,974 1,846,372 283,381 2,812,602 249,536
------------ ------------ ----------- ----------- --------------- -----------
Total increase
(decrease) in net
assets............... 387,955 6,336,140 1,846,079 284,057 2,814,461 248,949
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
------------ ------------ ----------- ----------- --------------- -----------
End of period.......... $387,955 $6,336,140 $1,846,079 $284,057 $2,814,461 $248,949
------------ ------------ ----------- ----------- --------------- -----------
------------ ------------ ----------- ----------- --------------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
29
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
1. ORGANIZATION:
Separate Account Two (the Account) is a separate investment account with
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income are accrued as of the ex-dividend date. Capital gains
income represents dividends from the Funds which are characterized as
capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Hartford and Nations
mutual funds are valued at the closing net asset value per share as
determined by the appropriate Fund as of June 30, 1998.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of up to
1.25% of the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contract owners' accounts, in accordance with the terms of the
contracts.
30
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS -- 87.3%
AUSTRALIA -- 5.2%
1,121 AMP Ltd.+......................................... $ 13,152
600 Australia & New Zealand Bank Group Ltd............ 4,149
500 Brambles Industries Ltd........................... 9,836
1,900 News Corp. Ltd.................................... 15,545
400 Telstra Corp. Ltd. ADR............................ 20,300
3,400 Woolworths Ltd.................................... 11,080
-----------
74,062
-----------
BRAZIL -- 1.8%
200 Centrais Electricas Brasileiras ADR............... 3,000
200 Petroleo Brasileiros ADR.......................... 3,718
175 Telebras ADR...................................... 19,108
-----------
25,826
-----------
FRANCE -- 13.0%
160 Accor SA.......................................... 44,779
200 Alcatel Alsthom Cie Generale...................... 40,723
50 L'Oreal........................................... 27,813
50 Promodes.......................................... 27,705
190 Societe National Elf Aquitaine.................... 26,713
100 Synthelabo........................................ 16,871
-----------
184,604
-----------
GERMANY -- 10.9%
200 Bayerische Vereinsbank............................ 16,971
250 Deutsche Pfandbrief & Hypothekenbank.............. 20,021
250 Henkel KGAA....................................... 24,749
250 Mannesmann AG..................................... 25,720
110 SAP AG............................................ 66,802
-----------
154,263
-----------
GREAT BRITAIN -- 16.7%
3,700 Amvescap PLC...................................... 36,141
4,900 Azlan Group PLC+.................................. 5,686
3,500 Bank of Scotland.................................. 39,213
1,200 Granada Group PLC................................. 22,080
800 HSBC Holdings PLC................................. 19,566
600 Hyder PLC......................................... 9,427
3,100 Securicor PLC..................................... 25,389
2,500 Smithkline Beecham................................ 30,535
1,500 Standard Chartered PLC............................ 17,056
4,700 WPP Group PLC..................................... 30,919
-----------
236,012
-----------
HONG KONG -- 1.1%
2,000 Hutchison Whampoa Ltd............................. 10,558
1,000 Sun Hung Kai Properties........................... 4,246
-----------
14,804
-----------
HUNGARY -- 0.6%
100 Gedeon Richter GDR................................ 7,975
-----------
IRELAND -- 3.5%
700 Bank of Ireland................................... 14,398
2,500 CRH PLC........................................... 35,514
-----------
49,912
-----------
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
ITALY -- 3.7%
1,900 Ente Nazionale Idrocarburi Spa.................... $ 12,458
5,500 Telecom Italia Spa................................ 40,505
-----------
52,963
-----------
JAPAN -- 12.3%
1,000 Bank of Tokyo-Mitsubishi.......................... 10,624
1,000 Dainippon Ink & Chemicals, Inc.................... 3,074
2,000 Fujitsu Ltd....................................... 21,118
2,000 Hitachi Ltd....................................... 13,090
1,000 Marui Co. Ltd..................................... 14,971
1,000 Matsushita Electric Industrial Co. Ltd............ 16,128
4,000 Ricoh Co.......................................... 42,265
1,000 Shimano, Inc...................................... 25,457
1,000 Shin-Etsu Chemicals Co. Ltd....................... 17,357
1,000 Toppan Printing Co................................ 10,733
-----------
174,817
-----------
MEXICO -- 0.6%
250 Grupo Carso SA de CV ADR.......................... 2,033
170 Grupo Vista SA GDR+............................... 6,396
-----------
8,429
-----------
NETHERLANDS -- 4.7%
750 Getronics N.V..................................... 38,927
200 Wolters Kluwer.................................... 27,472
-----------
66,399
-----------
SPAIN -- 3.1%
1,000 Empresa Nacional De Electricidad.................. 21,878
400 Repsol SA......................................... 21,989
-----------
43,867
-----------
SWEDEN -- 4.5%
1,000 Atlas Copco AB A.................................. 27,273
1,250 Ericsson (L.M.) Telephone Co. Class B............. 36,520
-----------
63,793
-----------
SWITZERLAND -- 5.6%
10 Nestle SA......................................... 21,436
35 Novartis AG....................................... 58,337
-----------
79,773
-----------
Total common stocks (cost $1,225,429)............. 1,237,499
-----------
PREFERRED STOCKS -- 0.0% (COST $169)
BRAZIL -- 0.0%
15 Centrais Geradoras do Sol do Brasil SA ADR........ 107
-----------
TOTAL INVESTMENTS (COST $1,225,598*)............... 87.3 % 1,237,606
OTHER ASSETS AND LIABILITIES (NET)................. 12.7 179,401
------ -----------
NET ASSETS......................................... 100.0 % $ 1,417,007
------ -----------
------ -----------
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
ABBREVIATIONS:
ADR -- American Depository Receipt.
GDR -- Global Depository Receipt.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
31
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
At June 30, 1998 sector diversification was as follows (unaudited):
SECTOR DIVERSIFICATION
<TABLE>
<CAPTION>
% OF NET
ASSETS VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS:
Medical Supplies and Devices...................... 11.3% $ 159,913
Telecommunications Equipment...................... 10.2 145,021
Cosmetics and Toiletries.......................... 7.0 99,405
Computer Software................................. 4.7 66,802
Oil and Gas....................................... 4.6 65,640
Banks............................................. 4.3 61,152
Hotels............................................ 3.2 44,779
Agriculture....................................... 3.2 44,577
Conglomerate...................................... 3.0 42,473
Office Supplies................................... 3.0 42,265
Other............................................. 32.8 465,472
----- -----------
TOTAL COMMON STOCKS............................... 87.3 1,237,499
PREFERRED STOCKS.................................. 0.0 107
----- -----------
TOTAL INVESTMENT.................................. 87.3 1,237,606
OTHER ASSETS AND LIABILITIES (NET)................ 12.7 179,401
----- -----------
NET ASSETS........................................ 100.0% $ 1,417,007
----- -----------
----- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<C> <S> <C>
COMMON STOCKS -- 88.8%
AEROSPACE & DEFENSE -- 3.8%
6,521 Gulfstream Aerospace Corp.+....................... $ 303,226
-----------
AIRLINES -- 3.2%
3,307 UAL Corp.+........................................ 257,946
-----------
AUTOMOBILE & TRUCKS -- 9.9%
8,092 Ford Motor Co..................................... 477,428
325 Volkswagen AG..................................... 314,166
-----------
791,594
-----------
BANKS -- 5.7%
1,506 Citicorp.......................................... 224,771
5,296 U.S. Bancorp...................................... 227,727
-----------
452,498
-----------
BUILDING & CONSTRUCTION -- 0.4%
1,670 MDC Holdings, Inc................................. 32,983
-----------
CHEMICALS -- 2.6%
3,754 Monsanto Co....................................... 209,755
-----------
COMPUTER SOFTWARE -- 8.3%
5,003 Microsoft Corp.+.................................. 542,200
2,550 PeopleSoft, Inc.+................................. 119,850
-----------
662,050
-----------
CONGLOMERATE -- 3.4%
2,975 General Electric Co............................... 270,725
-----------
COSMETICS & TOILETRIES -- 1.4%
200 L'Oreal........................................... 111,253
-----------
CRUISE LINES -- 4.2%
8,532 Carnival Corp..................................... 338,081
-----------
FINANCIAL SERVICES -- 8.9%
3,897 Associates First Capital Corp..................... 299,582
3,179 Federal National Mortgage Association............. 193,124
2,316 Merrill Lynch & Co., Inc.......................... 213,651
-----------
706,357
-----------
FOOD & BEVERAGES -- 2.4%
4,975 Coca-Cola Enterprises, Inc........................ 195,269
-----------
MACHINERY & EQUIPMENT -- 2.1%
3,200 Caterpillar, Inc.................................. 169,200
-----------
MULTIMEDIA -- 8.1%
8,660 Mediaone Group, Inc.+............................. 380,499
3,119 Time Warner, Inc.................................. 266,480
-----------
646,979
-----------
<CAPTION>
SHARES VALUE
--------- -----------
<C> <S> <C>
NETWORKING EQUIPMENT -- 1.7%
1,500 Cisco Systems, Inc.+.............................. $ 138,094
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 11.5%
1,900 Lilly (Eli) & Co.................................. 125,519
3,285 Pfizer, Inc....................................... 357,038
6,291 Warner-Lambert Co................................. 436,438
-----------
918,995
-----------
RETAIL -- 6.4%
2,858 Home Depot, Inc................................... 237,393
4,443 Wal-Mart Stores, Inc.............................. 269,912
-----------
507,305
-----------
TELECOMMUNICATIONS -- 0.0%
1 U.S. West, Inc.................................... 6
-----------
TELECOMMUNICATIONS EQUIPMENT -- 4.8%
4,598 Lucent Technologies, Inc.......................... 382,496
-----------
Total common stocks (cost $6,487,731)............. 7,094,812
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
FEDERAL HOME LOAN BANK (FHLB) -- 9.4% (COST $750,000)
DISCOUNT NOTE,
$ 750,000 5.750% due 07/01/98*(b)........................... 750,000
-----------
<CAPTION>
SHARES
---------
<C> <S> <C>
INVESTMENT COMPANY -- 0.4% (COST $34,000)
34,000 Nations Cash Reserves (a)......................... 34,000
-----------
TOTAL INVESTMENTS (COST $7,271,731*).................. 98.6 % 7,878,812
OTHER ASSETS AND LIABILITIES (NET).................... 1.4 109,244
------ -----------
NET ASSETS............................................ 100.0 % $ 7,988,056
------ -----------
------ -----------
</TABLE>
- ----------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc.
(b) Rate represents annualized yield at date of purchase.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
33
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MANAGED SMALL CAP INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- 93.8%
ADVERTISING -- 0.2%
400 True North Communications......................... $ 11,700
-----------
AEROSPACE & DEFENSE -- 1.5%
500 AAR Corp.......................................... 14,781
400 Alliant Techsystems, Inc.+........................ 25,300
700 BE Aerospace, Inc.+............................... 20,388
400 Orbital Sciences Corp.+........................... 14,950
300 Scott Technologies, Inc.+......................... 4,388
-----------
79,807
-----------
AGRICULTURE -- 0.2%
200 Delta & Pine Land Co.............................. 8,900
-----------
AIRLINES -- 1.8%
400 Air Express International Corp.................... 10,700
400 American Freightways, Inc.+....................... 4,000
1,100 Comair Holdings, Inc.............................. 33,963
400 Expeditors International of Washington, Inc....... 17,600
300 Pittston Burlington Group......................... 4,669
1,000 Skywest, Inc...................................... 28,000
-----------
98,932
-----------
APPAREL & TEXTILES -- 3.3%
300 Authentic Fitness Corp............................ 4,744
200 Brown Group, Inc.................................. 3,975
300 Cone Mills Corp.+................................. 2,588
300 Delta Woodside Industries, Inc.................... 1,500
200 G & K Services, Inc............................... 8,725
300 Galey & Lord, Inc.+............................... 4,463
600 Guilford Mills, Inc............................... 12,000
400 Hartmarx Corp.+................................... 3,025
300 Johnston Industries, Inc.......................... 1,388
800 K-Swiss Inc., Class A............................. 15,700
900 Mohawk Industries, Inc.+.......................... 28,519
500 Nautica Enterprises, Inc.+........................ 13,406
400 Osh Kosh B'Gosh Class A........................... 17,800
400 Oxford Industries, Inc............................ 13,975
700 Phillips-Van Heusen Corp.......................... 10,325
400 Pillowtex Corp.................................... 16,050
200 St. John Knits, Inc............................... 7,725
200 Timberland Co. Class A+........................... 14,388
800 Tultex Corp.+..................................... 1,950
-----------
182,246
-----------
AUTOMOBILES & TRUCKS -- 0.0%
200 Spartan Motors, Inc............................... 1,425
-----------
AUTOMOTIVE PARTS -- 1.7%
100 Breed Technologies, Inc........................... 1,531
300 Discount Auto Parts, Inc.+........................ 7,800
400 Intermet Corp..................................... 7,250
300 Myers Industries, Inc............................. 7,200
300 O'Reilly Automotive+.............................. 10,800
500 Simpson Industries................................ 6,844
300 SPX Corp.+........................................ 19,313
200 Standard Motor Products........................... 4,450
400 Standard Products Co.............................. 11,250
800 TBC Corp.+........................................ 5,300
400 Titan Wheel International, Inc.................... 6,800
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
AUTOMOTIVE PARTS -- (CONTINUED)
300 Wynn's International, Inc......................... $ 5,775
-----------
94,313
-----------
BANKS -- 5.1%
300 CCB Financial Corp................................ 31,875
300 Centura Banks, Inc................................ 18,750
500 Commercial Federal Corp........................... 15,813
300 Cullen Frost Bankers, Inc......................... 16,275
420 Downey Financial Corp............................. 13,729
585 First American Corp.+............................. 28,153
600 FirstBank of Puerto Rico.......................... 15,600
400 First Commercial Corp............................. 27,775
800 FirstMerit Corp................................... 23,300
300 HUBCO, Inc........................................ 10,744
400 Magna Group, Inc.................................. 22,600
1,600 Sovereign Bancorp, Inc............................ 26,150
600 St. Paul Bancorp, Inc............................. 13,556
200 U.S. Trust Corp................................... 15,250
-----------
279,570
-----------
BASIC INDUSTRIES -- 0.2%
300 Commercial Metals Co.............................. 9,300
200 Dravo Corp.+...................................... 1,850
-----------
11,150
-----------
BROADCASTING -- 0.1%
200 Westwood One, Inc.+............................... 5,044
-----------
BUILDING & CONSTRUCTION -- 3.6%
300 Apogee Enterprises, Inc........................... 4,594
2,000 D.R. Horton, Inc.................................. 41,750
1,000 Halter Marine Group, Inc.+........................ 15,063
1,700 Insituform Technologies, Inc. Class A+............ 23,534
700 MDC Holdings, Inc................................. 13,825
600 Morrison Knudsen Corp.+........................... 8,438
400 Ryland Group, Inc................................. 10,500
300 Southern Energy Homes+............................ 2,944
1,100 Standard Pacific Corp............................. 22,688
300 Stone & Webster, Inc.............................. 11,813
1,000 Toll Brothers, Inc.+.............................. 28,688
300 U.S. Home Corp.+.................................. 12,375
-----------
196,212
-----------
BUILDING SUPPLIES -- 2.9%
300 BMC West Corp.+................................... 2,625
200 Building Material Holding Corp.+.................. 2,763
100 Butler Manufacturing Co........................... 3,406
600 Champion Enterprises, Inc.+....................... 17,550
1,300 Dixie Group, Inc.................................. 12,350
400 Griffon Corp.+.................................... 5,125
300 Hughes Supply, Inc................................ 10,988
300 Insteel Industries, Inc........................... 1,894
600 JLG Industries, Inc............................... 12,113
200 Lone Star Industries.............................. 15,413
300 Medusa Corp....................................... 18,825
400 O'Sullivan Corp................................... 3,900
300 Republic Group, Inc............................... 6,300
200 Skyline Corp...................................... 6,525
400 Texas Industries, Inc............................. 21,200
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
BUILDING SUPPLIES -- (CONTINUED)
300 TJ International, Inc............................. $ 9,038
400 Universal Forest Products......................... 6,550
-----------
156,565
-----------
BUSINESS SERVICES -- 2.4%
300 Aspect Telecommunications+........................ 8,213
400 Billing Concepts Corp.+........................... 6,200
300 BISYS Group, Inc.+................................ 12,300
200 CDI Corp.+........................................ 5,350
300 Central Parking Corp.............................. 13,650
600 DeVRY, Inc.+...................................... 13,163
300 Franklin Covey Co.+............................... 5,775
300 Insurance Auto Auctions, Inc.+.................... 4,238
500 Interim Services+................................. 16,063
300 National Data Corp................................ 13,125
200 New England Business Service, Inc................. 6,450
200 NFO Worldwide, Inc.+.............................. 3,563
300 Norrell Corp...................................... 5,981
600 Offshore Logistics, Inc.+......................... 10,650
200 Volt Information Sciences, Inc.+.................. 5,425
-----------
130,146
-----------
CELLULAR COMMUNICATIONS -- 0.1%
400 Allen Telecom, Inc.+.............................. 4,650
-----------
CHEMICALS -- 2.1%
400 Cambrex Corp...................................... 10,500
100 Chemed Corp....................................... 3,406
200 ChemFirst, Inc.................................... 5,050
200 Dionex Corp.+..................................... 5,275
400 Geon Co........................................... 9,175
100 Lilly Industries, Inc. Class A.................... 2,163
500 MacDermid, Inc.................................... 14,125
200 McWhorter Technologies, Inc.+..................... 5,288
400 Mississippi Chemical Corp......................... 6,575
300 OM Group, Inc..................................... 12,375
100 Penford Corp...................................... 3,025
200 Quaker Chemical Corp.............................. 3,788
300 Scotts Co. (The) Class A+......................... 11,175
300 Tredegar Industries, Inc.......................... 25,463
-----------
117,383
-----------
COMPUTER SERVICES -- 2.1%
500 Acxiom Corp.+..................................... 12,469
200 Analysts International Corp....................... 5,675
400 BancTec, Inc.+.................................... 9,250
400 Ciber, Inc.+...................................... 15,200
400 Gerber Scientific, Inc............................ 9,100
100 Henry Jack & Associates........................... 3,438
400 Keane, Inc.+...................................... 22,400
100 Kronos, Inc.+..................................... 3,625
700 National Computer Systems, Inc.................... 16,800
500 Primark Corp.+.................................... 15,656
-----------
113,613
-----------
COMPUTER SOFTWARE -- 2.4%
300 Auspex Systems, Inc.+............................. 1,631
300 Broderbund Software, Inc. +....................... 6,844
200 Dialogic Corp.+................................... 5,950
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMPUTER SOFTWARE -- (CONTINUED)
200 Hyperion Software Corp.+.......................... $ 5,700
200 Platinum Software Corp.+.......................... 4,875
900 Platinum Technology, Inc.+........................ 25,706
800 Progress Software, Inc.+.......................... 32,800
1,400 Sterling Software, Inc.+.......................... 41,388
200 Vanstar Corp.+.................................... 2,913
300 Wall Data, Inc.+.................................. 4,800
-----------
132,607
-----------
CONGLOMERATE -- 1.1%
400 Justin Industries, Inc............................ 6,450
600 Sierra Pacific Resources.......................... 21,788
300 SPS Technologies, Inc.+........................... 17,550
200 Standex International Corp........................ 5,925
400 Triarc Cos., Inc.+................................ 8,775
-----------
60,488
-----------
CONSUMER DURABLE GOODS -- 2.2%
200 Boole & Babbage, Inc.+............................ 4,775
700 Fedders Corp...................................... 4,681
700 Kaman Corp. Class A............................... 13,322
300 La-Z Boy, Inc..................................... 16,950
600 Oakwood Homes Corp................................ 18,000
700 Royal Appliance Manufacturing Co.+................ 4,375
500 Russ Berrie & Co., Inc............................ 12,500
700 Smithfield Foods, Inc.+........................... 21,350
600 Thomas Industries, Inc............................ 14,663
400 Wolverine World Wide, Inc......................... 8,675
-----------
119,291
-----------
CONSUMER NON-DURABLE GOODS -- 0.9%
200 ABM Industries, Inc............................... 5,537
600 ADVO, Inc.+....................................... 16,912
200 Angelica Corp..................................... 4,200
400 Kellwood Co....................................... 14,300
600 Stride Rite Corp.................................. 9,038
-----------
49,987
-----------
CONSUMER SPECIALTY GOODS -- 0.1%
700 DiMon, Inc........................................ 7,875
-----------
CONVENIENCE STORES -- 0.2%
800 Casey's General Stores, Inc....................... 13,250
-----------
COSMETICS & TOILETRIES -- 0.4%
200 Nature's Sunshine Products, Inc................... 4,513
900 NBTY, Inc.+....................................... 16,538
-----------
21,051
-----------
ELECTRICAL EQUIPMENT -- 1.3%
400 Baldor Electric Co................................ 9,775
500 C-Cube Microsystems, Inc.+........................ 9,281
300 Fluke Corp........................................ 9,863
500 KEMET Corp.+...................................... 6,578
300 Kulicke & Soffa Industries, Inc.+................. 5,100
500 Microchip Technology, Inc.+....................... 13,063
300 Park Electrochemical Corp......................... 6,338
300 Regal Beloit...................................... 8,550
-----------
68,548
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MANAGED SMALL CAP INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRIC UTILITIES -- 1.6%
200 Bangor HydroElectric Co.+......................... $ 1,800
400 Central Vermont Public Service.................... 5,975
200 CILCORP, Inc...................................... 9,613
400 Commonwealth Energy System Cos.................... 15,175
200 Eastern Utilities Association..................... 5,250
200 Green Mountain Power Corp......................... 2,863
222 Interstate Power Co............................... 7,215
200 Orange and Rockland Utilities, Inc................ 10,738
300 TNP Enterprises, Inc.............................. 9,263
400 United Illuminating Co............................ 20,250
-----------
88,142
-----------
ELECTRONICS -- 4.8%
700 Applied Magnetics Corp.+.......................... 5,338
300 Belden, Inc....................................... 9,188
300 Bell Industries, Inc.+............................ 3,413
200 Benchmark Electronics, Inc.+...................... 4,000
300 Cable Design Technologies+........................ 6,188
500 Checkpoint Systems, Inc.+......................... 7,063
400 Comverse Technology, Inc.+........................ 20,750
900 Digi International, Inc.+......................... 18,225
200 Electro Scientific Industries, Inc.+.............. 6,313
300 Harmon Industries, Inc............................ 7,125
200 Innovex, Inc...................................... 2,613
300 Kent Electronics Corp.+........................... 5,494
700 Komag, Inc.+...................................... 3,741
200 Lydall, Inc.+..................................... 2,912
400 Methode Electronics, Inc.......................... 6,200
200 Oak Industries, Inc.+............................. 7,075
600 Pioneer Standard Electronics...................... 5,775
800 Read-Rite Corp.+.................................. 7,250
1,200 S3, Inc.+......................................... 6,075
600 Sanmina Corp.+.................................... 26,025
300 Smith (A.O.) Corp................................. 15,506
600 Tech Data Corp.+.................................. 25,725
200 Technitrol, Inc................................... 7,988
900 Telxon Corp....................................... 29,138
100 Three Five Systems, Inc.+......................... 1,744
400 Trimble Navigation Limited Designs+............... 6,475
300 Unitrode Corp.+................................... 3,450
200 Vicor Corp.+...................................... 2,775
700 VLSI Technology, Inc.+............................ 11,747
-----------
265,311
-----------
ENVIRONMENTAL MANAGEMENT -- 0.5%
300 Clarcor, Inc...................................... 6,300
500 Dames & Moore, Inc................................ 6,438
200 IMCO Recycling, Inc............................... 3,700
541 International Technology Corp.+................... 5,135
200 Ionics, Inc.+..................................... 7,375
-----------
28,948
-----------
FINANCIAL SERVICES -- 5.4%
600 AMRESCO, Inc.+.................................... 17,475
400 Astoria Financial Corp............................ 21,400
300 CMAC Investment Corp.............................. 18,450
200 Dain Rauscher Corp................................ 10,950
300 Eaton Vance Corp. (non-voting).................... 13,894
600 Enhance Financial Services Group.................. 20,250
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
FINANCIAL SERVICES -- (CONTINUED)
400 First American Financial Corp..................... $ 36,000
200 Gallagher (Arthur J.) & Co........................ 8,950
200 JSB Financial, Inc................................ 11,713
600 Keystone Financial, Inc........................... 22,200
600 Legg Mason, Inc................................... 34,538
500 Provident Financial Corp.......................... 22,813
600 Raymond James Financial, Inc...................... 17,963
700 Riggs National Corp............................... 20,453
200 SEI Investment Co................................. 12,400
200 Whitney Holding Corp.............................. 10,150
-----------
299,599
-----------
FOOD & BEVERAGES -- 2.6%
500 Canandaigua Brands, Inc. Class A+................. 24,594
900 Chiquita Brands International, Inc................ 12,656
100 Coca-Cola Co...................................... 6,613
400 DEKALB Genetics Corp. Class B..................... 37,850
600 Earthgrains Co.................................... 33,525
200 GoodMark Foods, Inc............................... 5,925
600 J&J Snack Foods Corp.+............................ 12,525
500 Richfood Holdings, Inc............................ 10,344
-----------
144,032
-----------
FURNITURE & APPLIANCES -- 0.9%
100 Bassett Furniture................................. 2,819
500 Ethan Allen Interiors, Inc........................ 24,969
800 Interface, Inc.................................... 16,150
200 Juno Lighting, Inc................................ 4,725
100 Rival Co.......................................... 1,350
-----------
50,013
-----------
GAS UTILITIES -- 1.8%
300 Atmos Energy Corp................................. 9,150
100 Cascade Natural Gas Corp.......................... 1,569
300 Central Hudson Gas & Electric..................... 13,763
300 Connecticut Energy Corp........................... 8,344
500 KN Energy, Inc.................................... 27,094
500 Piedmont Natural Gas Co., Inc..................... 16,813
300 Public Service Company of North Carolina, Inc..... 6,525
400 Southwest Gas Corp................................ 9,775
300 Valmont Industries, Inc........................... 5,991
-----------
99,024
-----------
HEALTH CARE -- 0.5%
400 Coherent, Inc.+................................... 6,863
200 Envoy Corp.+...................................... 9,475
450 Sierra Health Services, Inc.+..................... 11,334
-----------
27,672
-----------
HEALTH CARE MANAGEMENT -- 0.8%
300 Magellan Health Services, Inc.+................... 7,613
600 Paragon Health Network, Inc.+..................... 9,675
500 Universal Health Services, Inc. Class B+.......... 29,188
-----------
46,476
-----------
HOTELS -- 0.1%
200 Capstar Hotel Co.+................................ 5,600
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
36
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
INFORMATION SERVICES -- 0.1%
400 Fritz Companies, Inc.+............................ $ 5,350
-----------
INSURANCE -- 4.6%
400 ALLIED Group, Inc................................. 18,725
500 American Bankers Insurance Group, Inc............. 30,062
300 Capital Re Corp................................... 21,488
100 Executive Risk, Inc............................... 7,375
400 Fidelity National Financial, Inc.................. 15,925
400 Fremont General Corp.............................. 21,675
440 Frontier Insurance Group, Inc..................... 9,928
200 Hilb, Rogal and Hamilton Co....................... 3,125
200 Life Re Corp...................................... 16,575
500 Mutual Risk Management............................ 18,219
300 NAC Re Corp....................................... 16,012
500 Orion Capital Corp................................ 27,938
800 Protective Life Corp.............................. 29,350
400 Selective Insurance Group......................... 8,963
200 Trenwick Group, Inc............................... 7,769
-----------
253,129
-----------
MACHINERY & EQUIPMENT -- 1.9%
400 Applied Industrial Technologies, Inc.............. 8,275
300 Applied Power Inc. Class A........................ 10,313
500 Astec Industries +................................ 17,250
400 Blount International Corp. Class A................ 11,400
200 Cognex Corp.+..................................... 3,700
300 Flow International Corp.+......................... 3,487
400 Global Industrial Technologies, Inc.+............. 5,750
200 Kuhlman Corp...................................... 7,913
150 Lindsay Manufacturing Co.......................... 4,069
200 Manitowoc, Inc.................................... 8,075
400 Paxar Corp.+...................................... 4,600
300 Robbins & Meyers, Inc............................. 8,719
300 Zebra Technologies Corp. Class A+................. 12,825
-----------
106,376
-----------
MEDICAL SERVICES -- 3.0%
300 ADAC Laboratories Designs+........................ 6,750
400 Cerner Corp.+..................................... 11,325
200 Express Scripts, Inc. Class A+.................... 16,125
400 Genesis Health Ventures+.......................... 10,000
500 Immune Response Corp.+............................ 7,500
800 Integrated Health Services, Inc................... 30,000
300 Invacare Corp..................................... 7,688
800 Lincare Holdings, Inc.+........................... 33,650
700 Mariner Health Group, Inc.+....................... 11,638
600 PhyCor, Inc.+..................................... 9,938
200 Protein Design Labs, Inc.+........................ 4,819
400 Renal Care Group, Inc.+........................... 17,625
-----------
167,058
-----------
MEDICAL SUPPLIES & DEVICES -- 2.5%
300 Ballard Medical Products.......................... 5,400
700 Collagen Corp..................................... 12,688
200 Cooper Companies, Inc. (The)+..................... 7,288
300 IDEXX Laboratories, Inc.+......................... 7,463
200 Mentor Corp. (Minnesota).......................... 4,850
500 Owens & Minor, Inc. (New)......................... 5,000
400 Patterson Dental Co.+............................. 14,650
400 PSS World Medical, Inc.+.......................... 5,850
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
MEDICAL SUPPLIES & DEVICES -- (CONTINUED)
300 Respironics, Inc.+................................ $ 4,669
600 Safeskin Corp.+................................... 24,675
300 Sola International, Inc.+......................... 9,806
100 SpaceLabs Medical, Inc.+.......................... 1,675
400 STERIS Corp.+..................................... 25,438
200 Sunrise Medical, Inc.+............................ 3,000
100 Vital Signs, Inc.................................. 1,825
-----------
134,277
-----------
METAL PROCESSORS & FABRICATES -- 0.7%
200 Amcast Industrial Corp............................ 3,725
600 Mueller Industries, Inc.+......................... 22,275
200 Quanex Corp....................................... 6,063
200 Wolverine Tube, Inc.+............................. 7,600
-----------
39,663
-----------
METALS & MINING -- 0.5%
700 AMCOL International Corp.......................... 8,444
400 Birmingham Steel Corp............................. 4,950
200 Castle (A.M.) & Co................................ 4,400
200 Commonwealth Industries, Inc...................... 2,000
200 Materials Sciences Corp.+......................... 2,325
600 Steel Technologies, Inc........................... 6,150
-----------
28,269
-----------
NETWORKING EQUIPMENT -- 0.3%
600 Anixter International, Inc.+...................... 11,438
400 Network Equipment Technologies, Inc.+............. 6,275
-----------
17,713
-----------
OFFICE SUPPLIES -- 0.1%
200 Brady (W.H.) Co................................... 5,563
-----------
OIL & GAS -- 3.9%
400 Barrett Resources Corp.+.......................... 15,000
300 Benton Oil & Gas Co.+............................. 3,188
300 Cabot Oil & Gas Corp.............................. 6,000
600 Cross Timbers Oil Co.............................. 11,438
500 Devon Energy Corp................................. 17,469
600 Energen Corp...................................... 12,075
400 HS Resources, Inc.+............................... 5,825
800 Input/Output, Inc.+............................... 14,250
200 KCS Energy, Inc................................... 2,288
500 New Field Exploration Co.+........................ 12,438
200 New Jersey Resources Corp......................... 7,138
400 Northwest Natural Gas Co.......................... 11,188
390 Ocean Energy, Inc.+............................... 7,629
400 Oceaneering International, Inc.+.................. 7,100
400 Plains Resources, Inc.+........................... 7,150
200 Pogo Producing Co................................. 5,025
700 Pride International, Inc.+........................ 11,856
1,300 Santa Fe Energy Resources, Inc.+.................. 13,975
400 Snyder Oil Corp................................... 7,975
400 Southwestern Energy Co............................ 3,675
600 Tuboscope Vetco International Corp.+.............. 11,850
800 Vintage Petroleum, Inc............................ 15,100
300 Wiser Oil Co...................................... 3,319
-----------
212,951
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
37
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MANAGED SMALL CAP INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
OIL SERVICES -- 0.4%
500 Pool Energy Services Co.+......................... $ 7,375
300 Seitel, Inc.+..................................... 4,856
400 Wicor, Inc........................................ 9,250
-----------
21,481
-----------
PACKAGING & CONTAINERS -- 0.6%
300 AptarGroup, Inc................................... 18,656
300 Shorewood Packaging Corp.+........................ 4,763
300 Zero Corp......................................... 8,513
-----------
31,932
-----------
PAPER & FOREST PRODUCTS -- 0.6%
400 Buckeye Technologies, Inc.+....................... 9,425
300 Caraustar Industries, Inc......................... 8,663
300 Pope & Talbot, Inc................................ 3,506
300 Schweitzer-Maudit International, Inc.............. 8,700
-----------
30,294
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 2.2%
900 ALPHARMA Inc. Class A............................. 19,800
700 Cephalon, Inc.+................................... 5,513
600 Cor Therapeutics, Inc.+........................... 8,325
200 Cygnus, Inc.+..................................... 2,088
500 ICN Pharmacy Services, Inc........................ 22,844
200 Medimmune, Inc.+.................................. 12,475
500 Pharmaceutical Marketing Services+................ 7,125
600 Roberts Pharmaceutical Corp. +.................... 13,800
500 Regeneron Pharmaceuticals, Inc.+.................. 4,609
1,400 SEQUUS Pharmaceuticals, Inc.+..................... 15,925
500 Syncor International Corp.+....................... 8,625
-----------
121,129
-----------
PUBLISHING -- 1.6%
400 Bowne & Co., Inc.................................. 18,000
500 Merrill Corp...................................... 11,031
100 Plenum Publishing Corp............................ 7,325
300 Thomas Nelson Publisher........................... 4,013
700 Valassis Communications, Inc.+.................... 26,994
600 World Color Press, Inc.+.......................... 21,000
-----------
88,363
-----------
RECREATION & GAMING -- 1.7%
400 Arctic Cat, Inc................................... 3,950
400 Aztar Corp.+...................................... 2,725
1,600 Bell Sports Corp.+................................ 15,350
200 Carmike Cinemas, Inc. Class A+.................... 5,388
100 GC Companies +.................................... 5,188
1,400 Grand Casinos, Inc.+.............................. 23,450
400 Hollywood Park, Inc.+............................. 5,050
400 Huffy Corp........................................ 7,250
200 K2, Inc........................................... 3,525
400 Midway Games, Inc.+............................... 6,250
400 Players International, Inc.+...................... 1,988
300 Thor Industries, Inc.............................. 8,306
400 Winnebago Industries.............................. 5,100
300 WMS Industries, Inc.+............................. 1,256
-----------
94,776
-----------
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
RESTAURANTS -- 2.9%
400 Applebee's International, Inc..................... $ 8,950
300 Cheesecake Factory (The)+......................... 6,788
600 CKE Restaurants, Inc.............................. 24,750
300 Consolidated Products, Inc.+...................... 6,338
600 Foodmaker, Inc.+.................................. 10,125
200 IHOP Corp.+....................................... 8,275
300 Landry's Seafood Restaurants, Inc.+............... 5,428
300 Luby's Cafeterias, Inc............................ 5,269
500 Marcus Corp....................................... 8,938
700 Prime Hospitality Corp.+.......................... 12,206
1,000 Ruby Tuesday, Inc................................. 15,500
900 Ryan's Family Steak Houses, Inc.+................. 9,225
500 ShowBiz Pizza Time, Inc.+......................... 20,156
400 Sonic Corp.+...................................... 8,950
600 TCBY Enterprises, Inc............................. 5,513
-----------
156,411
-----------
RETAIL -- 6.0%
1,300 Cash America International, Inc................... 19,825
1,200 Cato Corp. Class A................................ 20,888
398 CVS Corp.......................................... 15,497
300 Damark International, Inc. Class A+............... 2,550
600 Dress Barn, Inc.+................................. 14,925
400 Eagle Hardware & Garden, Inc.+.................... 9,250
500 Fabri-Centers of America, Class A+................ 13,688
500 Filene's Basement Corp.+.......................... 2,727
600 Footstar, Inc.+................................... 28,800
300 Hancock Fabrics, Inc.............................. 3,750
400 Lillian Vernon Corp............................... 6,650
500 Linens 'N Things Class A+......................... 15,281
450 Men's Warehouse, Inc. (The)+...................... 14,850
800 Michaels Stores, Inc.+............................ 28,225
500 MicroAge, Inc.+................................... 7,094
900 Pier 1 Imports, Inc............................... 21,488
300 Regis Corp........................................ 8,869
800 Ross Stores, Inc.................................. 34,400
600 Shopko Stores, Inc.+.............................. 20,400
600 Sports Authority, Inc. (The)+..................... 8,963
600 Stein Mart, Inc+.................................. 8,100
200 Toro Co........................................... 6,850
600 Williams-Sonoma, Inc.+............................ 19,088
-----------
332,158
-----------
SATELLITE SERVICES -- 0.1%
200 California Microwave, Inc. +...................... 3,500
600 Digital Microwave Corp. +......................... 4,350
-----------
7,850
-----------
SEMICONDUCTORS -- 1.9%
300 Burr Brown Corp.+................................. 6,300
300 Dallas Semiconductor Corp......................... 9,300
200 Etec Systems, Inc.+............................... 7,038
200 HADCO Corp.+...................................... 4,663
200 Integrated Circuit Systems, Inc.+................. 3,325
600 International Rectifier Corp.+.................... 5,100
200 Lattice Semiconductor Corp.+...................... 5,681
200 Marshall Industries+.............................. 5,450
400 Novellus Systems, Inc.+........................... 14,275
300 Photronics, Inc.+................................. 6,619
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SEMICONDUCTORS -- (CONTINUED)
400 Plexus Corp.+..................................... $ 7,950
200 Speedfam International, Inc.+..................... 3,688
300 Standard Microsystems Corp.+...................... 2,644
800 Vitesse Semiconductor Corp.+...................... 24,700
-----------
106,733
-----------
SUPERMARKETS -- 0.6%
600 Fleming Cos....................................... 10,538
400 Nash Finch Corp................................... 6,025
300 Whole Foods Market, Inc.+......................... 18,150
-----------
34,713
-----------
TELEPHONE UTILITIES -- 0.2%
600 Tel-Save Holdings, Inc.+.......................... 8,850
-----------
TRANSPORTATION -- 0.5%
400 Kirby Corp.+...................................... 10,100
100 Railtex, Inc.+.................................... 1,325
500 U.S. Freightways Corp............................. 16,422
-----------
27,847
-----------
TRUCKING & SHIPPING -- 1.5%
700 Arkansas Best Corp.+.............................. 6,563
200 Frozen Foods Express Industries................... 1,975
400 Heartland Express, Inc.+.......................... 8,100
200 Landstar System, Inc.+............................ 6,988
300 M.S. Carriers, Inc.+.............................. 8,138
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
TRUCKING & SHIPPING -- (CONTINUED)
1,200 Rollins Truck Leasing Corp........................ $ 14,850
200 Wabash National Corp.............................. 5,150
900 Werner Enterprises, Inc........................... 17,156
600 Yellow Corp.+..................................... 11,138
-----------
80,058
-----------
WATER UTILITIES -- 0.5%
200 Aquarion Co....................................... 6,838
100 Consumers Water Co................................ 2,763
300 Philadelphia Suburban Corp........................ 6,563
200 Southern California Water Co...................... 5,425
400 United Water Resources, Inc....................... 7,200
-----------
28,789
-----------
Total common stocks (cost $5,308,037)............. 5,161,303
-----------
INVESTMENT COMPANY -- 5.9% (COST $322,000)
322,000 Nations Cash Reserves (a)......................... 322,000
-----------
TOTAL INVESTMENTS (COST $5,630,037*).................. 99.7 % 5,483,303
OTHER ASSETS AND LIABILITIES (NET).................... 0.3 17,641
------ -----------
NET ASSETS............................................ 100.0 % $ 5,500,944
------ -----------
------ -----------
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and sub-advised by TradeStreet
Investment Associates, Inc.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
39
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS -- 95.7%
AEROSPACE & DEFENSE -- 1.9%
500 United Technologies Corp.......................... $ 46,250
-----------
AIRLINES -- 1.9%
575 UAL Corp.+........................................ 44,850
-----------
APPAREL & TEXTILES -- 3.9%
950 Liz Claiborne, Inc................................ 49,637
850 V.F. Corp......................................... 43,775
-----------
93,412
-----------
APPLIANCES -- 1.9%
925 Maytag Corp....................................... 45,672
-----------
AUTOMOBILE & TRUCKS -- 2.0%
825 Ford Motor Co..................................... 48,675
-----------
BANKS -- 3.5%
600 Ahmanson (H.F.) & Co.............................. 42,600
550 Chase Manhattan Corp.............................. 41,525
-----------
84,125
-----------
BUILDING & CONSTRUCTION -- 1.9%
850 USG Corp.......................................... 46,006
-----------
CHEMICALS -- 1.7%
400 Rohm & Haas Co.................................... 41,575
-----------
COMPUTERS -- 2.2%
575 Dell Computer Corp.+.............................. 53,367
-----------
COMPUTER RELATED -- 2.0%
1,100 Storage Technology Corp.+......................... 47,712
-----------
COMPUTER SOFTWARE -- 6.7%
1,050 Compuware Corp.+.................................. 53,681
525 Microsoft Corp.+.................................. 56,897
1,950 Symantec Corp.+................................... 50,944
-----------
161,522
-----------
ELECTRIC UTILITIES -- 1.9%
1,125 DTE Energy Co..................................... 45,422
-----------
ELECTRONICS -- 3.8%
1,275 SCI Systems, Inc.+................................ 47,972
775 Sundstrand Corp................................... 44,369
-----------
92,341
-----------
FINANCIAL SERVICES -- 8.2%
1 Associates First Capital Corp..................... 48
1,125 GreenPoint Financial Corp......................... 42,328
575 Morgan Stanley Dean Witter & Co................... 52,541
1,025 Paine Webber Group, Inc........................... 43,947
1,175 SLM Holding Corp.................................. 57,575
-----------
196,439
-----------
FOOD & BEVERAGES -- 2.1%
925 Dean Foods Co..................................... 50,817
-----------
GAS UTILITIES -- 1.7%
738 Columbia Energy Group............................. 41,023
-----------
HOUSEWARES -- 2.0%
1,450 Premark International, Inc........................ 46,763
-----------
INSTRUMENTS - CONTROLS -- 1.6%
1,025 Parker Hannifin Corp.............................. 39,078
-----------
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
INSURANCE -- 9.8%
500 Allstate Corp..................................... $ 45,781
700 Equitable Co, Inc................................. 52,412
750 MGIC Investment Corp.............................. 42,797
875 SunAmerica Inc.................................... 50,258
725 Travelers Group, Inc.............................. 43,953
-----------
235,201
-----------
MACHINERY & EQUIPMENT -- 3.7%
825 Caterpillar, Inc.................................. 43,622
1,025 Ingersoll-Rand Co................................. 45,164
-----------
88,786
-----------
MEDICAL SUPPLIES & DEVICES -- 4.0%
700 Guidant Corp...................................... 49,919
425 Pfizer, Inc....................................... 46,192
-----------
96,111
-----------
OIL & GAS -- 5.6%
875 Ashland, Inc...................................... 45,172
1,500 BJ Services Co.+.................................. 43,594
1,150 Sun Co............................................ 44,634
-----------
133,400
-----------
PAPER & FOREST PRODUCTS -- 1.8%
975 Fort James Corp................................... 43,388
-----------
PUBLISHING -- 1.8%
775 Knight-Ridder, Inc................................ 42,673
-----------
RETAIL -- 10.9%
1,150 Best Buy Co., Inc.+............................... 41,544
775 Costco Co., Inc.+................................. 48,873
850 Dayton Hudson Corp................................ 41,225
1,000 Lowe's Co......................................... 40,563
1,200 Safeway, Inc.+.................................... 48,825
1,625 TJX Co., Inc...................................... 39,203
-----------
260,233
-----------
STEEL -- 1.8%
1,300 USX-U.S. Steel Group.............................. 42,900
-----------
TELECOMMUNICATIONS -- 3.4%
725 AT&T Corp......................................... 41,416
875 Century Telephone Enterprises, Inc................ 40,141
-----------
81,557
-----------
TELECOMMUNICATIONS EQUIPMENT -- 2.0%
575 Lucent Technologies............................... 47,833
-----------
Total common stocks (cost $2,267,031)............. 2,297,131
-----------
INVESTMENT COMPANY -- 2.3% (COST $56,000)
56,000 Nations Cash Reserves (a)......................... 56,000
-----------
TOTAL INVESTMENTS (COST $2,323,031*)............... 98.0 % 2,353,131
OTHER ASSETS AND LIABILITIES (NET)................. 2.0 48,919
------ -----------
NET ASSETS......................................... 100.0 % $ 2,402,050
------ -----------
------ -----------
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
(a) Money market mutual fund registered under the 1940 Act and sub-advised by
TradeStreet Investment Associates, Inc.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
40
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MARSICO GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS -- 90.3%
AEROSPACE & DEFENSE -- 6.1%
1,625 AlliedSignal Corp................................. $ 72,109
5,485 Gulfstream Aerospace Corp.+....................... 255,053
500 Lockhead Martin Corp.............................. 52,938
-----------
380,100
-----------
AIRLINES -- 5.2%
962 AMR Corp.+........................................ 80,086
3,074 UAL Corp.+........................................ 239,772
-----------
319,858
-----------
APPAREL -- 0.5%
1,000 Polo Ralph Lauren Corp.+.......................... 28,000
-----------
AUTOMOBILES -- 5.6%
4,200 Ford Motor Co..................................... 247,800
100 Volkswagen AG..................................... 96,667
-----------
344,467
-----------
BANKS -- 5.0%
1,254 Citicorp.......................................... 187,159
500 Star Banc Corp.................................... 31,938
250 Wells Fargo & Co.................................. 92,250
-----------
311,347
-----------
BUILDING & CONSTRUCTION -- 2.6%
8,056 MDC Holdings, Inc................................. 159,106
-----------
CHEMICALS -- 3.0%
2,583 Cytec Industries, Inc.+........................... 114,298
1,324 Monsanto Co....................................... 73,979
-----------
188,277
-----------
COMPUTER SOFTWARE -- 5.5%
2,158 Microsoft Corp.+.................................. 233,873
2,225 Peoplesoft, Inc.+................................. 104,575
-----------
338,448
-----------
CONGLOMERATE -- 5.2%
1,550 General Electric Co............................... 141,050
1,069 Ralston-Ralston Purina Group...................... 124,872
792 Textron, Inc...................................... 56,777
-----------
322,699
-----------
CRUISE LINES -- 2.9%
4,611 Carnival Corp..................................... 182,711
-----------
FINANCIAL SERVICES -- 8.4%
3,134 Associates First Capital Corp..................... 240,926
1,419 Federal National Mortgage Association............. 86,204
2,136 Merrill Lynch & Co., Inc.......................... 197,046
-----------
524,176
-----------
FOOD & BEVERAGES -- 2.7%
4,225 Coca-Cola Enterprises, Inc........................ 165,831
-----------
HOTELS & RESORTS -- 0.9%
1,600 Four Seasons Hotels, Inc.......................... 56,400
-----------
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
MACHINERY & EQUIPMENT -- 1.2%
1,400 Caterpillar, Inc.................................. $ 74,025
-----------
MULTIMEDIA -- 8.6%
6,917 Mediaone Group, Inc.+............................. 303,916
2,724 Time Warner, Inc.................................. 232,732
-----------
536,648
-----------
NETWORKING EQUIPMENT -- 1.9%
1,300 Cisco Systems, Inc.+.............................. 119,681
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 9.1%
1,650 Lilly (Eli) & Co.................................. 109,003
1,065 Pfizer Inc........................................ 115,752
579 Schering-Plough Corp.............................. 53,051
4,162 Warner-Lambert Co................................. 288,739
-----------
566,545
-----------
RENTAL EQUIPMENT -- 3.1%
4,360 Hertz Corp. Class A............................... 193,203
-----------
RETAIL -- 8.4%
2,728 Gap, Inc.......................................... 168,113
2,112 Home Depot, Inc................................... 175,428
2,906 Wal-Mart Stores, Inc.............................. 176,539
-----------
520,080
-----------
TELECOMMUNICATIONS -- 0.0%
1 U.S. West, Inc.................................... 21
-----------
TELECOMMUNICATIONS EQUIPMENT -- 4.4%
3,251 Lucent Technologies............................... 270,442
-----------
Total common stocks (cost $5,154,775)............. 5,602,065
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------
<C> <S> <C>
FEDERAL HOME LOAN BANK (FHLB) -- 9.7% (COST $600,000)
Discount Note
$600,000 5.750% 07/01/98(b)................................ 600,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<C> <S> <C>
INVESTMENT COMPANY -- 0.0% (COST $4,000)
4,000 Nations Cash Reserves (a)......................... 4,000
-----------
TOTAL INVESTMENTS (COST $5,758,775*)............... 100.0% 6,206,065
OTHER ASSETS AND LIABILITIES (NET)................. 0.0 (35)
------ -----------
NET ASSETS......................................... 100.0% $ 6,206,030
------ -----------
------ -----------
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
(a) Money market mutual fund registered under the 1940 Act and sub-advised by
TradeStreet Investment Associates, Inc.
(b) Rate represents annualized yield at date of purchase.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
41
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MANAGED INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- 91.2%
ADVERTISING -- 0.1%
100 Omnicom Group, Inc................................ $ 4,988
-----------
AEROSPACE & DEFENSE -- 1.7%
200 Allied Signal Corp................................ 8,875
600 Boeing Co......................................... 26,737
200 General Dynamics Corp............................. 9,300
200 Lockheed Martin Corp.............................. 21,175
100 Northrop Grumman Corp............................. 10,313
300 Raytheon Co. Class B.............................. 17,738
100 TRW, Inc.......................................... 5,462
100 United Technologies Corp.......................... 9,250
-----------
108,850
-----------
AIRLINES -- 0.9%
200 AMR Corp.+........................................ 16,650
100 Delta Air Lines, Inc.............................. 12,925
400 Southwest Airlines Co............................. 11,850
200 US Airways Group, Inc.+........................... 15,850
-----------
57,275
-----------
APPAREL & TEXTILES -- 0.5%
400 Fruit of The Loom, Inc. Class A+.................. 13,300
100 Liz Claiborne, Inc................................ 5,225
100 Springs Industries, Inc........................... 4,612
200 V.F. Corp......................................... 10,300
-----------
33,437
-----------
AUTOMOBILE & TRUCKS -- 2.3%
600 Chrysler Corp..................................... 33,825
1,000 Ford Motor Co..................................... 59,000
600 General Motors Corp............................... 40,087
200 ITT Industries.................................... 7,475
200 PACCAR, Inc....................................... 10,450
-----------
150,837
-----------
AUTOMOTIVE PARTS -- 0.6%
100 Autozone, Inc.+................................... 3,194
200 Cooper Tire & Rubber.............................. 4,125
200 Dana Corp......................................... 10,700
100 Eaton Corp........................................ 7,775
100 Goodyear Tire & Rubber Co......................... 6,444
300 Navistar International Corp.+..................... 8,662
-----------
40,900
-----------
BANKS -- 7.9%
200 Ahmanson (H.F.) & Co.............................. 14,200
400 Banc One Corp..................................... 22,325
200 Bank of New York, Inc............................. 12,137
500 BankAmerica Corp.................................. 43,219
200 BankBoston Corp................................... 11,125
100 Bankers Trust N.Y. Corp........................... 11,606
100 BB&T Corp......................................... 6,762
700 Chase Manhattan Corp.............................. 52,850
300 Citicorp.......................................... 44,775
200 Comerica, Inc..................................... 13,250
200 Fifth Third Bancorp............................... 12,600
200 First Chicago Corp. NBD........................... 17,725
700 First Union Corp.................................. 40,775
200 Fleet Financial Group, Inc........................ 16,700
100 Golden West Financial Corp........................ 10,631
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
BANKS -- (CONTINUED)
200 Huntington Bancshares, Inc........................ $ 6,700
300 KeyCorp........................................... 10,688
200 Mellon Bank Corp.................................. 13,925
100 Morgan (J.P.) & Co., Inc.......................... 11,713
200 National City Corp................................ 14,200
100 NationsBank Corp.................................. 7,650
100 Northern Trust Corp............................... 7,625
500 Norwest Corp...................................... 18,688
200 PNC Bank Corp..................................... 10,763
200 Republic New York Corp............................ 12,588
100 State Street Corp................................. 6,950
100 Summit Bancorp.................................... 4,750
100 SunTrust Banks, Inc............................... 8,131
300 U.S. Bancorp...................................... 12,900
100 Wachovia Corp..................................... 8,450
60 Wells Fargo & Co.................................. 22,140
-----------
508,541
-----------
BROADCASTING -- 0.2%
400 CBS Corp.......................................... 12,700
-----------
BUILDING & CONSTRUCTION -- 0.6%
300 Centex Corp....................................... 11,325
300 Kaufman & Broad Home Corp......................... 9,525
100 Masco Corp........................................ 6,050
400 Pulte Corp........................................ 11,950
-----------
38,850
-----------
BUSINESS SERVICES -- 0.6%
400 Cendant Corp.+.................................... 8,350
100 Cognizant Corp.................................... 6,312
100 Deluxe Corp....................................... 3,581
200 First Data Corp................................... 6,662
100 Interpublic Group of Cos. Inc..................... 6,069
200 Service Corp. International....................... 8,575
-----------
39,549
-----------
CABLE TELEVISION -- 0.5%
200 Comcast Corp. Class A............................. 8,119
200 HBO & Co.......................................... 7,050
400 MediaOne Group, Inc.+............................. 17,575
-----------
32,744
-----------
CHEMICALS -- 2.1%
200 Air Products & Chemicals, Inc..................... 8,000
100 Avery Dennison Corp............................... 5,375
100 Dow Chemical Co................................... 9,669
700 Du Pont (E.I.) de Nemours & Co.................... 52,237
100 Eastman Chemical Co.+............................. 6,225
100 Goodrich (B.F.) Co................................ 4,963
300 Grace (W.R.) & Co.+............................... 5,119
100 Mallinckrodt, Inc................................. 2,969
300 Monsanto Co....................................... 16,763
100 Morton International, Inc......................... 2,500
100 PPG Industries, Inc............................... 6,956
100 Praxair, Inc...................................... 4,681
100 Sigma-Aldrich Corp................................ 3,513
100 Union Carbide Corp................................ 5,338
-----------
134,308
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
COMPUTERS -- 3.0%
100 Apple Computer, Inc.+............................. $ 2,869
1,283 Compaq Computer Corp.............................. 36,405
400 Dell Computer Corp................................ 37,125
700 Hewlett-Packard Co................................ 41,912
600 International Business Machines Corp.............. 68,888
300 Unisys Corp.+..................................... 8,475
-----------
195,674
-----------
COMPUTER SERVICES -- 0.5%
100 Automatic Data Processing, Inc.................... 7,287
100 Bay Networks, Inc.+............................... 3,225
300 Computer Associates International, Inc............ 16,669
100 Computer Sciences Corp.+.......................... 6,400
-----------
33,581
-----------
COMPUTER SOFTWARE -- 2.9%
1,500 Microsoft Corp.+.................................. 162,563
200 Novell, Inc.+..................................... 2,550
600 Oracle Systems Corp.+............................. 14,738
200 Sun Microsystems, Inc.+........................... 8,687
-----------
188,538
-----------
CONGLOMERATE -- 4.7%
2,000 General Electric Co............................... 182,000
1,000 Procter & Gamble Co............................... 91,062
100 Textron, Inc...................................... 7,169
300 Tyco International, Ltd........................... 18,900
-----------
299,131
-----------
CONSUMER SPECIALTY GOODS -- 1.4%
200 Aeroquip-Vickers, Inc............................. 11,675
100 Fortune Brands, Inc............................... 3,844
100 Loews Corp........................................ 8,712
1,500 Philip Morris Cos., Inc........................... 59,062
100 Sherwin-Williams Co............................... 3,312
100 Tenneco, Inc...................................... 3,806
-----------
90,411
-----------
COSMETICS & TOILETRIES -- 0.7%
800 Gillette Co....................................... 45,350
-----------
DRILLING -- 0.1%
100 Burlington Resources, Inc......................... 4,306
200 Helmerich & Payne, Inc............................ 4,600
-----------
8,906
-----------
ELECTRIC UTILITIES -- 2.8%
100 Ameren Corp....................................... 3,975
100 American Electric Power, Inc...................... 4,537
100 Apache Corp....................................... 3,150
200 Baltimore Gas & Electric Co....................... 6,212
100 Carolina Power & Light Co......................... 4,337
300 Central & South West Corp......................... 8,062
100 CINergy Corp...................................... 3,500
300 Consolidated Edison Co. New York, Inc............. 13,819
100 Dominion Resources, Inc........................... 4,075
300 DTE Energy Co..................................... 12,112
200 Duke Energy Corp.................................. 11,850
100 Eastern Enterprises............................... 4,287
300 Edison International.............................. 8,869
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
ELECTRIC UTILITIES -- (CONTINUED)
200 Entergy Corp...................................... $ 5,750
300 FirstEnergy Corp.................................. 9,225
100 FPL Group, Inc.................................... 6,300
100 GPU, Inc.......................................... 3,781
300 Houston Industries, Inc........................... 9,263
300 Niagara Mohawk Power Corp.+....................... 4,481
200 PacifiCorp........................................ 4,525
200 PECO Energy Co.................................... 5,863
300 PG&E Corp......................................... 9,469
200 PP&L Resources, Inc............................... 4,538
100 Public Service Enterprise Group................... 3,444
500 Southern Co....................................... 13,844
100 Texas Utilities Co................................ 4,163
200 Unicom Corp....................................... 7,013
-----------
180,444
-----------
ELECTRICAL EQUIPMENT -- 1.0%
600 Cisco Systems, Inc.+.............................. 55,237
100 Raychem Corp...................................... 2,956
100 Thomas & Betts Corp............................... 4,925
-----------
63,118
-----------
ELECTRONICS -- 1.2%
100 AMP, Inc.......................................... 3,437
200 Applied Materials, Inc.+.......................... 5,900
300 EMC Corp.+........................................ 13,444
200 Emerson Electric Co............................... 12,062
100 Honeywell, Inc.................................... 8,356
400 Motorola, Inc..................................... 21,025
100 Rockwell International Corp....................... 4,806
200 Seagate Technology, Inc.+......................... 4,763
100 Tektronix, Inc.................................... 3,537
-----------
77,330
-----------
ENTERTAINMENT -- 0.9%
400 Disney (Walt) Co.................................. 42,025
200 King World Productions, Inc.+..................... 5,100
200 Viacom, Inc. Class B+............................. 11,650
-----------
58,775
-----------
ENVIRONMENTAL MANAGEMENT -- 0.3%
300 Browning-Ferris Industries, Inc................... 10,425
100 Johnson Controls, Inc............................. 5,706
300 Laidlaw, Inc. Class B+............................ 3,656
100 LSI Logic Corp.+.................................. 2,306
-----------
22,093
-----------
FINANCIAL SERVICES -- 4.4%
300 American Express Co............................... 34,200
200 American General Corp............................. 14,237
209 Associates First Capital Corp..................... 16,067
200 Countrywide Credit Industries, Inc................ 10,150
400 Federal Home Loan Mortgage Corp................... 18,825
600 Federal National Mortgage Association............. 36,450
100 Green Tree Financial Corp......................... 4,281
100 Hartford Financial Services Group, Inc............ 11,437
200 Household International, Inc...................... 9,950
200 Lehman Brothers Holdings, Inc..................... 15,513
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MANAGED INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
150 Marsh & McLennan Companies, Inc................... $ 9,066
300 MBNA Corp......................................... 9,900
200 Merrill Lynch & Co., Inc.......................... 18,450
500 Morgan Stanley Dean Witter & Co................... 45,688
100 Providian Corp.................................... 7,856
200 Schwab (Charles) Corp............................. 6,500
300 Washington Mutual, Inc............................ 13,031
-----------
281,601
-----------
FOOD & BEVERAGES -- 4.6%
300 Anheuser-Busch Cos., Inc.......................... 14,156
300 Archer-Daniels-Midland Co......................... 5,813
300 Campbell Soup Co.................................. 15,937
1,500 Coca-Cola Co...................................... 128,250
300 ConAgra, Inc...................................... 9,506
100 Coors (Adolph) Co. Class B........................ 3,400
300 Heinz (H.J.) Co................................... 16,837
300 Kellogg Co........................................ 11,269
900 PepsiCo, Inc...................................... 37,069
100 Quaker Oats Co.................................... 5,495
300 Sara Lee Corp..................................... 16,781
400 Unilever N.V. ADR................................. 31,575
-----------
296,088
-----------
FURNITURE & APPLIANCES -- 0.3%
200 Maytag Corp....................................... 9,875
100 Newell Co......................................... 4,981
100 Whirlpool Corp.................................... 6,875
-----------
21,731
-----------
GAS UTILITIES -- 0.4%
100 Consolidated Natural Gas Co....................... 5,887
100 NICOR, Inc........................................ 4,013
150 Sempra Energy+.................................... 4,173
100 Sonat, Inc........................................ 3,862
200 Williams Cos., Inc................................ 6,750
-----------
24,685
-----------
HEALTH CARE -- 0.4%
500 Columbia/HCA Healthcare Corp...................... 14,562
100 Humana, Inc.+..................................... 3,119
100 United Healthcare Corp............................ 6,350
-----------
24,031
-----------
HOTELS -- 0.2%
100 Hilton Hotels Corp................................ 2,850
100 Marriot International, Inc. Class A............... 3,237
100 Mirage Resorts, Inc.+............................. 2,131
100 Starwood Hotels & Resorts......................... 4,831
-----------
13,049
-----------
INSURANCE -- 4.3%
100 Aetna, Inc........................................ 7,612
400 Allstate Corp..................................... 36,625
400 American International Group, Inc................. 58,400
100 Aon Corp.......................................... 7,025
100 Chubb Corp........................................ 8,012
200 CIGNA Corp........................................ 13,800
200 Conseco, Inc...................................... 9,350
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
INSURANCE -- (CONTINUED)
50 General Re Corp................................... $ 12,812
200 Lincoln National Corp. Ltd........................ 18,275
200 MBIA, Inc......................................... 14,975
100 MGIC Investment Corp.............................. 5,706
100 SAFECO Corp....................................... 4,544
300 St. Paul Companies, Inc........................... 12,619
200 SunAmerica, Inc................................... 11,488
100 Torchmark Corp.................................... 4,575
700 Travelers Group, Inc.............................. 42,438
100 UNUM Corp......................................... 5,550
-----------
273,806
-----------
MACHINERY & EQUIPMENT -- 2.1%
200 Ball Corp......................................... 8,037
100 Black & Decker Corp............................... 6,100
100 Case Corp......................................... 4,825
400 Caterpillar, Inc.................................. 21,150
200 Cincinnati Milacron, Inc.......................... 4,875
100 Cooper Industries, Inc............................ 5,494
100 Cummins Engine, Inc............................... 5,125
200 Deere & Co........................................ 10,575
100 Dover Corp........................................ 3,425
200 Illinois Tool Works, Inc.......................... 13,338
200 Ingersoll-Rand Co................................. 8,813
200 McDermott International, Inc...................... 6,888
100 NACCO Industries, Inc. Class A.................... 12,925
200 Parker-Hannifin Corp.............................. 7,625
100 Stanley Works..................................... 4,156
100 Thermo Electron Corp.+............................ 3,419
300 Timken Co......................................... 9,244
-----------
136,014
-----------
MEDIA -- 0.4%
300 Time Warner, Inc.................................. 25,631
-----------
MEDICAL SERVICES -- 0.2%
300 HEALTHSOUTH Corp.+................................ 8,006
200 Tenet Healthcare Corp.+........................... 6,250
-----------
14,256
-----------
MEDICAL SUPPLIES & DEVICES -- 0.7%
100 Allergan, Inc..................................... 4,637
100 Bausch & Lomb, Inc................................ 5,013
300 Baxter International, Inc......................... 16,144
100 Becton, Dickinson & Co............................ 7,763
100 Biomet, Inc....................................... 3,306
100 Guidant Corp...................................... 7,131
-----------
43,994
-----------
METALS & MINING -- 0.2%
200 Alcan Aluminum Ltd................................ 5,525
100 Aluminum Co. of America........................... 6,594
200 Barrick Gold Corp................................. 3,837
-----------
15,956
-----------
OFFICE EQUIPMENT -- 0.5%
200 Pitney Bowes, Inc................................. 9,625
200 Xerox Corp........................................ 20,325
-----------
29,950
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
44
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
OIL & GAS -- 6.0%
100 Amerada Hess Corp................................. $ 5,431
600 Amoco Corp........................................ 24,975
200 Ashland Oil, Inc.................................. 10,325
200 Atlantic Richfield Co............................. 15,625
400 Chevron Corp...................................... 33,225
100 Coastal Corp...................................... 6,981
1,700 Exxon Corp........................................ 121,231
500 Mobil Corp........................................ 38,313
200 Occidental Petroleum Corp......................... 5,400
100 Oryx Energy Co.+.................................. 2,213
100 Pennzoil Co....................................... 5,063
200 Phillips Petroleum Co............................. 9,638
1,200 Royal Dutch Petroleum Co. ADR..................... 65,775
200 Sun Co., Inc...................................... 7,763
300 Texaco, Inc....................................... 17,906
200 Union Pacific Resources Group, Inc................ 3,513
200 Unocal Corp....................................... 7,150
200 USX-Marathon Group................................ 6,863
-----------
387,390
-----------
OIL SERVICES -- 0.9%
100 Baker Hughes, Inc................................. 3,456
100 Dresser Industries, Inc........................... 4,406
200 Enron Corp........................................ 10,812
200 Halliburton Co.................................... 8,912
100 Rowan Companies, Inc.+............................ 1,944
300 Schlumberger Ltd.................................. 20,494
100 Western Atlas, Inc.+.............................. 8,488
-----------
58,512
-----------
PACKAGING & CONTAINERS -- 0.1%
100 Owens-Illinois, Inc.+............................. 4,513
-----------
PAPER & FOREST PRODUCTS -- 0.6%
100 Champion International Corp....................... 4,919
200 Fort James Corp................................... 8,900
100 Georgia-Pacific Corp.............................. 5,894
200 International Paper Co............................ 8,600
100 Mead Corp......................................... 3,175
100 Westvaco Corp..................................... 2,825
100 Weyerhaeuser Co................................... 4,619
-----------
38,932
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 8.8%
1,200 Abbott Laboratories............................... 49,050
800 American Home Products Corp....................... 41,400
200 Amgen, Inc.+...................................... 13,075
600 Bristol-Myers Squibb Co........................... 68,962
1,000 Johnson & Johnson................................. 73,750
700 Lilly (Eli) & Co.................................. 46,244
800 Merck & Co., Inc.................................. 107,000
800 Pfizer, Inc....................................... 86,950
400 Schering-Plough Corp.............................. 36,650
600 Warner-Lambert Co................................. 41,625
-----------
564,706
-----------
PHOTO EQUIPMENT & SUPPLIES -- 0.1%
100 Eastman Kodak Co.................................. 7,306
-----------
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
PRINTING & PUBLISHING -- 1.2%
100 American Greetings Corp. Class A.................. $ 5,094
100 Donnelley (RR) & Sons............................. 4,575
100 Dow Jones & Co., Inc.............................. 5,575
100 Dun & Bradstreet Corp............................. 3,612
200 Gannett Co., Inc.................................. 14,212
100 Ikon Office Solutions, Inc........................ 1,456
200 Knight-Ridder, Inc................................ 11,013
100 McGraw-Hill Cos., Inc............................. 8,156
100 New York Times Co. Class A........................ 7,925
100 Times Mirror Co. Class A.......................... 6,288
100 Tribune Co........................................ 6,881
-----------
74,787
-----------
RAILROADS -- 0.5%
100 Burlington Northern Santa Fe, Inc................. 9,819
100 CSX Corp.......................................... 4,550
200 Norfolk Southern Corp............................. 5,963
200 Union Pacific Corp................................ 8,825
-----------
29,157
-----------
RECREATION -- 0.3%
200 Brunswick Corp.................................... 4,937
300 Fleetwood Enterprises, Inc........................ 12,000
-----------
16,937
-----------
RESTAURANTS & LODGING -- 0.7%
900 Darden Restaurants, Inc........................... 14,287
400 McDonald's Corp................................... 27,600
100 Wendy's International, Inc........................ 2,350
-----------
44,237
-----------
RETAIL -- 5.1%
200 CVS Corp.......................................... 7,787
200 Costco Companies, Inc.+........................... 12,612
400 Dayton Hudson Corp................................ 19,400
200 Dillard Department Stores, Inc. Class A........... 8,287
200 Federated Department Stores, Inc.+................ 10,762
300 Gap, Inc.......................................... 18,487
500 Home Depot, Inc................................... 41,531
600 Kmart Stores Corp.+............................... 11,475
300 Limited, Inc...................................... 9,938
100 Longs Drug Stores Corp............................ 2,888
200 Lowe's Companies, Inc............................. 8,113
200 May Department Stores Co.......................... 13,100
100 Mercantile Stores, Inc............................ 7,894
100 Penney (J.C.) Co., Inc............................ 7,231
200 Rite Aid Corp..................................... 7,513
200 Sears, Roebuck & Co............................... 12,213
100 Tandy Corp........................................ 5,306
400 TJX Companies, Inc................................ 9,650
200 Toys R Us, Inc.+.................................. 4,713
200 Venator Group, Inc.+.............................. 3,825
300 Walgreen Co....................................... 12,394
1,500 Wal-Mart Stores, Inc.............................. 91,125
-----------
326,244
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
45
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS MANAGED INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SEMICONDUCTORS -- 1.4%
100 Advanced Micro Devices, Inc.+..................... $ 1,706
200 National Semiconductor Corp.+..................... 2,637
1,000 Intel Corp........................................ 74,125
100 Micron Technology, Inc.+.......................... 2,481
200 Texas Instruments, Inc............................ 11,663
-----------
92,612
-----------
STEEL -- 0.5%
100 Allegheny Teledyne, Inc........................... 2,281
400 Armco, Inc.+...................................... 2,550
600 Bethlehem Steel Corp.+............................ 7,462
200 Inland Steel Industries, Inc...................... 5,638
100 Nucor Corp........................................ 4,600
200 USX-U.S. Steel Group.............................. 6,600
-----------
29,131
-----------
SUPERMARKETS -- 0.4%
100 Albertson's, Inc.................................. 5,175
100 American Stores Co................................ 2,419
100 Great Atlantic & Pacific Tea, Inc................. 3,306
200 Kroger Co.+....................................... 8,575
200 SuperValu, Inc.................................... 8,875
-----------
28,350
-----------
TELECOMMUNICATIONS -- 6.3%
300 AirTouch Communications, Inc.+.................... 17,531
200 ALLTEL Corp....................................... 9,300
700 Ameritech Corp.................................... 31,412
1,200 AT&T Corp......................................... 68,550
1,000 Bell Atlantic Corp................................ 45,625
700 BellSouth Corp.................................... 46,988
600 GTE Corp.......................................... 33,375
400 MCI Communications Corp........................... 23,250
1,200 SBC Communications, Inc........................... 48,000
300 Sprint Corp....................................... 21,150
500 Tele Communication Class A+....................... 19,219
310 U.S. West, Inc.................................... 14,570
600 WorldCom, Inc.+................................... 29,063
-----------
408,033
-----------
<CAPTION>
SHARES VALUE
-------- -----------
<C> <S> <C>
TELECOMMUNICATIONS EQUIPMENT -- 1.5%
900 Lucent Technologies............................... $ 74,869
300 Northern Telecommunications Ltd................... 17,025
100 Tellabs, Inc.+.................................... 7,163
-----------
99,057
-----------
TOYS -- 0.2%
100 Hasbro, Inc....................................... 3,931
200 Mattel, Inc....................................... 8,463
-----------
12,394
-----------
TRUCKING & SHIPPING -- 0.3%
200 FDX Corp.+........................................ 12,550
200 Ryder Systems, Inc................................ 6,313
-----------
18,863
-----------
WASTE DISPOSAL -- 0.1%
300 Laidlaw Environmental Services.................... 1,088
100 Waste Management, Inc............................. 3,500
-----------
4,588
-----------
Total common stocks (cost $5,709,738)............. 5,872,871
-----------
INVESTMENT COMPANY -- 8.5% (COST $543,000)
543,000 Nations Cash Reserves (a)......................... 543,000
-----------
TOTAL INVESTMENTS (COST $6,252,738*)................. 99.7 % 6,415,871
OTHER ASSETS AND LIABILITIES (NET)................... 0.3 21,439
------ -----------
NET ASSETS........................................... 100.0 % $ 6,437,310
------ -----------
------ -----------
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
(a) Money market mutual fund registered under the 1940 Act and sub-advised by
TradeStreet Investment Associates, Inc.
ABBREVIATIONS:
ADR -- American Depository Receipt.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
46
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS -- 96.1%
AEROSPACE & DEFENSE -- 5.8%
525 AlliedSignal, Inc................................. $ 23,297
275 Lockheed Martin Corp.............................. 29,116
750 Raytheon Co. Class B.............................. 44,344
525 United Technologies Corp.......................... 48,563
-----------
145,320
-----------
AIRLINES -- 2.2%
425 Delta Air Lines, Inc.............................. 54,931
-----------
APPAREL -- 0.7%
325 Liz Claiborne, Inc................................ 16,981
-----------
AUTOMOBILE & TRUCKS -- 2.2%
425 Chrysler Corp..................................... 23,959
825 ITT Industries, Inc............................... 30,834
-----------
54,793
-----------
AUTOMOTIVE PARTS -- 1.6%
375 B.F. Goodrich Co.................................. 18,609
325 Echlin, Inc....................................... 15,945
100 Lear Corp.+....................................... 5,131
-----------
39,685
-----------
BANKS -- 7.5%
775 Banc One Corp..................................... 43,255
300 BankBoston Corp................................... 16,687
325 Bank of New York, Inc............................. 19,723
575 Chase Manhattan Corp.............................. 43,413
100 Citicorp.......................................... 14,925
725 Mellon Bank Corp.................................. 50,478
-----------
188,481
-----------
BUILDING & CONSTRUCTION -- 1.4%
400 Centex Corp....................................... 15,100
350 Masco Corp........................................ 21,175
-----------
36,275
-----------
CHEMICALS -- 1.5%
275 Cytec Industries, Inc.+........................... 12,169
275 Dow Chemical Co................................... 26,589
-----------
38,758
-----------
COMPUTERS -- 4.0%
800 Compaq Computer Corp.............................. 22,700
375 International Business Machines Corp.............. 43,055
825 Sun Microsystems, Inc.+........................... 35,836
-----------
101,591
-----------
COMPUTER SERVICES -- 1.2%
500 Ceridian Corp.+................................... 29,375
-----------
CONGLOMERATE -- 0.6%
425 Tenneco, Inc...................................... 16,177
-----------
CONSUMER GOODS -- 1.2%
150 Avon Products, Inc................................ 11,625
250 Unilever N.V. ADR................................. 19,734
-----------
31,359
-----------
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
CONSUMER SPECIALTY GOODS -- 2.1%
1,050 Philip Morris Companies, Inc...................... $ 41,344
425 UST, Inc.......................................... 11,475
-----------
52,819
-----------
DRILLING -- 2.0%
325 Diamond Offshore Drilling......................... 13,000
1,100 Valero Energy Corp................................ 36,575
-----------
49,575
-----------
ELECTRIC UTILITIES -- 3.7%
600 Baltimore Gas & Electric Co....................... 18,637
225 Consolidated Edison............................... 10,364
1,300 Energy East Corp.................................. 54,113
250 Florida Progress Corp............................. 10,281
-----------
93,395
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT -- 1.2%
500 Harris Corp....................................... 22,344
150 Rockwell International Corp....................... 7,209
-----------
29,553
-----------
FINANCIAL SERVICES -- 3.8%
75 Federal National Mortgage Association............. 4,556
400 Hartford Financial Services Group, Inc............ 45,750
1,050 Paine Webber Group, Inc........................... 45,019
-----------
95,325
-----------
FOOD & BEVERAGES, -- 5.0%
550 Interstate Bakeries Corp.......................... 18,253
850 Nabisco Holdings Corp. Class A.................... 30,653
1,150 PepsiCo, Inc...................................... 47,366
525 Quaker Oats Co.................................... 28,842
-----------
125,114
-----------
GAS UTILITIES -- 1.4%
1,050 Williams Companies, Inc........................... 35,438
-----------
HEALTH CARE -- 5.6%
2,100 Beverly Enterprises+.............................. 29,006
775 Columbia HCA Healthcare Corp...................... 22,572
1,350 Tenet Healthcare Corp.+........................... 42,188
650 Wellpoint Health Networks+........................ 48,100
-----------
141,866
-----------
INSURANCE -- 4.3%
475 CIGNA Corp........................................ 32,775
50 General Re Corp................................... 12,813
700 Lincoln National Corp. Ltd........................ 63,963
-----------
109,551
-----------
MACHINERY & EQUIPMENT -- 1.8%
500 Cooper Industries, Inc............................ 27,469
200 Foster Wheeler Corp............................... 4,288
225 Sundstrand Corp................................... 12,881
-----------
44,638
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
47
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
METALS & MINING -- 0.6%
400 ASARCO, Inc....................................... $ 8,900
475 Cyprus Amax Minerals Co........................... 6,294
-----------
15,194
-----------
OFFICE EQUIPMENT -- 2.3%
575 Xerox Corp........................................ 58,434
-----------
OIL & GAS -- 9.4%
125 Atlantic Richfield Co............................. 9,766
500 British Petroleum Co. PLC ADR..................... 44,125
100 Chevron Corp...................................... 8,306
525 Coastal Corp...................................... 36,651
600 Columbia Energy Group............................. 33,375
325 Exxon Corp........................................ 23,177
600 Mobil Corp........................................ 45,975
975 Noble Affiliates, Inc............................. 37,050
-----------
238,425
-----------
OIL SERVICES -- 0.4%
275 Smith International, Inc.+........................ 9,573
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 4.6%
125 American Home Products Corp....................... 6,469
475 Bristol-Myers Squibb Co........................... 54,595
600 Schering-Plough Corp.............................. 54,975
-----------
116,039
-----------
PUBLISHING -- 0.8%
575 Dun & Bradstreet Corp............................. 20,772
-----------
RETAIL -- 5.9%
725 Dillard Department Stores, Inc. Class A........... 30,042
875 Federated Department Stores, Inc.+................ 47,086
600 Kroger Co.+....................................... 25,725
575 May Department Stores Co.......................... 37,663
300 TJX Companies, Inc................................ 7,237
-----------
147,753
-----------
<CAPTION>
SHARES VALUE
------ -----------
<C> <S> <C>
SAVINGS & LOAN -- 2.0%
725 Ahmanson H.F. & Co................................ $ 51,475
-----------
SEMICONDUCTORS -- 1.2%
400 Intel Corp........................................ 29,650
-----------
TELECOMMUNICATIONS -- 6.7%
475 AT&T Corp......................................... 27,134
575 Bell South Corp................................... 38,597
875 GTE Corp.......................................... 48,672
275 MCI Communications Corp........................... 15,984
1,000 SBC Communications, Inc........................... 40,000
-----------
170,387
-----------
TOYS -- 1.4%
900 Hasbro, Inc....................................... 35,381
-----------
Total common stocks (cost $2,443,984)............. 2,424,083
-----------
INVESTMENT COMPANY -- 2.7% (COST $67,000)
67,000 Nations Cash Reserves (a)......................... 67,000
-----------
TOTAL INVESTMENTS (COST $2,510,984*)............... 98.8 % 2,491,083
OTHER ASSETS AND LIABILITIES (NET)................. 1.2 31,354
------ -----------
NET ASSETS......................................... 100.0 % $ 2,522,437
------ -----------
------ -----------
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
(a) Money market mutual fund registered under the 1940 Act and sub-advised by
TradeStreet Investment Associates, Inc.
ABBREVIATIONS:
ADR -- American Depository Receipt.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
48
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS BALANCED ASSETS PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<C> <S> <C>
COMMON STOCKS -- 63.5%
AEROSPACE & DEFENSE -- 3.0%
165 Litton Industries, Inc.+.......................... $ 9,735
75 Lockheed Martin Corp.............................. 7,941
215 Raytheon Co. Class B.............................. 12,712
150 United Technologies Corp.......................... 13,875
-----------
44,263
-----------
APPAREL -- 1.3%
225 Liz Claiborne, Inc................................ 11,756
280 Reebok International Ltd.+........................ 7,752
-----------
19,508
-----------
AUTOMOTIVE PARTS -- 2.2%
420 Cooper Tire & Rubber Co........................... 8,662
400 Genuine Parts Co.................................. 13,800
200 Lear Corp.+....................................... 10,263
-----------
32,725
-----------
BANKS -- 3.8%
100 BankAmerica Corp.................................. 8,644
115 Bankers Trust Corp................................ 13,347
190 Chase Manhattan Corp.............................. 14,345
350 First Security Corp............................... 7,492
325 One Valley BanCorp................................ 11,822
-----------
55,650
-----------
BUILDING & CONSTRUCTION -- 1.1%
245 Armstrong World International..................... 16,507
-----------
CHEMICALS -- 4.1%
295 BetzDearborn, Inc................................. 12,445
115 Dow Chemical Co................................... 11,119
440 Ferro Corp........................................ 11,138
225 Lubrizol Corp..................................... 6,806
230 Olin Corp......................................... 9,588
125 PPG Industries, Inc............................... 8,695
-----------
59,791
-----------
COMPUTER SOFTWARE -- 0.9%
350 Autodesk, Inc..................................... 13,519
-----------
COMPUTERS -- 1.7%
210 Hewlett-Packard Co................................ 12,574
100 International Business Machines Corp.............. 11,481
-----------
24,055
-----------
CONGLOMERATE -- 0.6%
300 Raychem Corp...................................... 8,869
-----------
CONSUMER DURABLE GOODS -- 1.3%
230 Avnet, Inc........................................ 12,578
175 Rubbermaid, Inc................................... 5,808
-----------
18,386
-----------
COSMETICS & TOILETRIES -- 1.5%
350 Alberto-Culver Co................................. 10,150
260 Kimberly-Clark Corp............................... 11,928
-----------
22,078
-----------
<CAPTION>
SHARES VALUE
--------- -----------
<C> <S> <C>
ELECTRIC UTILITIES -- 2.0%
250 Dominion Resources, Inc........................... $ 10,187
230 Peoples Energy Corp............................... 8,884
450 PP&L Resources, Inc............................... 10,209
-----------
29,280
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT -- 6.9%
370 AMP, Inc.......................................... 12,719
500 Arrow Electronics, Inc.+.......................... 10,875
270 Dexter Corp....................................... 8,589
275 Harris Corp....................................... 12,288
190 Motorola, Inc..................................... 9,987
225 Rockwell International Corp....................... 10,814
325 SCI Systems, Inc.+................................ 12,228
425 Teradyne, Inc.+................................... 11,369
285 Varian Associates, Inc............................ 11,115
-----------
99,984
-----------
FINANCIAL SERVICES -- 1.6%
100 Hartford Financial Services Group, Inc............ 11,438
275 Southtrust Corp................................... 11,963
-----------
23,401
-----------
FOOD & BEVERAGES -- 2.9%
205 Anheuser-Bush Companies, Inc...................... 9,673
475 IBP, Inc.......................................... 8,609
325 Nabisco Holdings Corp. Class A.................... 11,720
140 Quaker Oats Co.................................... 7,691
75 Sara Lee Corp..................................... 4,195
-----------
41,888
-----------
INSURANCE -- 2.4%
135 Allstate Corp..................................... 12,361
275 Conseco, Inc...................................... 12,856
205 SAFECO Corp....................................... 9,315
-----------
34,532
-----------
MACHINERY & EQUIPMENT -- 4.0%
535 AGCO Corp......................................... 11,001
285 Briggs & Stratton Corp............................ 10,670
165 Eaton Corp........................................ 12,829
470 Flowserve Corp.................................... 11,456
355 General Signal Corp............................... 12,780
-----------
58,736
-----------
MEDICAL SUPPLIES & DEVICES -- 0.6%
225 Bard (C.R.), Inc.................................. 8,564
-----------
OIL & GAS -- 11.4%
200 Amoco Corp........................................ 8,325
250 Apache Corp....................................... 7,875
155 Atlantic Richfield Co............................. 12,109
175 Coastal Corp...................................... 12,217
355 Equitable Resources............................... 10,828
135 Mobil Corp........................................ 10,344
215 Murphy Oil Corp................................... 10,898
485 Occidental Petroleum Corp......................... 13,095
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
49
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NATIONS BALANCED ASSETS PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
OIL & GAS -- (CONTINUED)
225 Phillips Petroleum Co............................. $ 10,842
300 Sun Co., Inc...................................... 11,644
440 Ultra Diamond Shamrock Corp....................... 13,888
685 Union Pacific Resources Group..................... 12,030
300 Unocal Corp....................................... 10,725
300 Valero Energy Corp................................ 9,975
410 YFP S.A. Sponsored ADR............................ 12,326
-----------
167,121
-----------
OIL SERVICES -- 0.7%
300 Baker Hughes, Inc................................. 10,369
-----------
PAPER & FOREST PRODUCTS -- 0.6%
330 Westvaco Corp..................................... 9,323
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 1.7%
280 Abbott Laboratories............................... 11,445
170 Johnson & Johnson................................. 12,538
-----------
23,983
-----------
RAILROADS -- 0.7%
105 Burlington Northern Santa Fe, Inc................. 10,310
-----------
RECREATION -- 0.9%
500 Brunswick Corp.................................... 12,344
-----------
RESTAURANTS -- 0.6%
390 Wendy's International, Inc........................ 9,165
-----------
RETAIL -- GENERAL -- 0.8%
265 Dillards Inc. Class A............................. 10,981
-----------
STEEL -- 0.5%
150 Nucor Corp........................................ 6,900
-----------
TELECOMMUNICATIONS -- 1.7%
315 ALLTEL Corp....................................... 14,647
425 Scientific-Atlanta, Inc........................... 10,784
-----------
25,431
-----------
<CAPTION>
SHARES VALUE
--------- -----------
<C> <S> <C>
TELEPHONE UTILITIES -- 0.8%
600 Telefonica de Peru S.A. ADR....................... $ 12,263
-----------
TOYS & GAMES -- 0.5%
200 Hasbro, Inc....................................... 7,863
-----------
TRANSPORTATION -- 0.7%
225 CNF Transportation Inc............................ 9,562
-----------
Total common stocks (cost $970,943)............... 927,351
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 31.8%
U.S. TREASURY BONDS -- 6.6%
$ 90,000 6.125% due 11/15/27............................... 96,441
-----------
U.S. TREASURY NOTES -- 25.2%
250,000 7.500% due 10/31/99............................... 256,210
112,000 5.625% due 12/31/02............................... 112,489
-----------
368,699
-----------
Total U.S. government and agency obligations (cost
$460,031)....................................... 465,140
-----------
<CAPTION>
SHARES
---------
<C> <S> <C>
INVESTMENT COMPANY -- 4.1% (COST $60,300)
60,300 Nations Cash Reserves (a)......................... 60,300
-----------
TOTAL INVESTMENTS (COST $1,491,274*).................. 99.4 % 1,452,791
OTHER ASSETS AND LIABILITIES (NET).................... 0.6 8,714
------ -----------
NET ASSETS............................................ 100.0 % $ 1,461,505
------ -----------
------ -----------
</TABLE>
- ----------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
(a) Money market mutual fund registered under the 1940 Act and sub-advised by
TradeStreet Investment Associates, Inc.
ABBREVIATIONS:
ADR -- American Depository Receipt.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
50
<PAGE>
NATIONS FUNDS
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS & LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL FOCUSED
GROWTH PORTFOLIO EQUITIES PORTFOLIO
----------------- ------------------
<S> <C> <C>
ASSETS:
Investments, at value
(see accompaning
schedules)............. $1,237,606 $7,878,812
Cash..................... 158,993 827
Foreign currency at value
(cost $89)............. 92 --
Short-term investments
held as collateral for
loaned securities...... -- 382,933
Dividends receivable..... 2,873 1,607
Interest receivable...... -- --
Receivable from
investment advisor..... 9,589 908
Receivable for Fund
shares sold............ -- 89,181
Receivable for investment
securities sold........ -- 103,213
Unamortized organization
costs.................. 18,136 18,136
----------------- ------------------
TOTAL ASSETS......... 1,427,289 8,475,617
----------------- ------------------
LIABILITIES:
Collateral on securities
loaned................. -- 382,933
Payable for Fund shares
redeemed............... 13 --
Payable for investment
securities purchased... -- 94,283
Administration fee
payable................ 311 1,287
Shareholder servicing and
distribution fees
payable................ -- --
Transfer agent fees
payable................ 125 125
Custodian fees payable... 5,033 2,135
Accrued expenses and
other payables......... 4,800 6,798
----------------- ------------------
TOTAL LIABILITIES.... 10,282 487,561
----------------- ------------------
NET ASSETS............... $1,417,007 $7,988,056
----------------- ------------------
----------------- ------------------
Investments at cost...... $1,225,598 $7,271,731
----------------- ------------------
----------------- ------------------
NET ASSETS CONSIST OF:
Paid in capital.......... $1,394,149 $7,296,194
Undistributed net
investment income...... 6,052 10,094
Accumulated net realized
gain on investments,
written options and
foreign currency
transactions........... 4,795 74,687
Net unrealized
appreciation
(depreciation) of
investments and assets
and liabilities in
foreign currencies..... 12,011 607,081
----------------- ------------------
TOTAL REPRESENTING
NET ASSETS
APPLICABLE TO
CAPITAL SHARES
OUTSTANDING........ $1,417,007 $7,988,056
----------------- ------------------
----------------- ------------------
Shares outstanding....... 138,999 696,165
Net asset value, offering
and redemption price
per share.............. $ 10.19 $ 11.47
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
52
<PAGE>
<TABLE>
<CAPTION>
GROWTH &
MANAGED SMALLCAP DISCIPLINED INCOME MANAGED INDEX VALUE BALANCED ASSETS
INDEX PORTFOLIO EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- -------------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value
(see accompaning
schedules)............. $5,483,303 $2,353,131 $6,206,065 $6,415,871 $2,491,083 $1,452,791
Cash..................... 930 22 60 1,226 586 60
Foreign currency at value
(cost $89)............. -- -- -- -- -- --
Short-term investments
held as collateral for
loaned securities...... 178,477 80,922 310,579 80,784 -- 241,246
Dividends receivable..... 3,478 1,718 915 7,855 3,730 1,891
Interest receivable...... -- -- -- -- -- 3,880
Receivable from
investment advisor..... 21,881 7,755 2,158 21,813 7,687 10,368
Receivable for Fund
shares sold............ -- 29,842 94,634 -- 4,919 1,577
Receivable for investment
securities sold........ 297 -- 66,662 -- 4,993 8,335
Unamortized organization
costs.................. 18,136 18,136 18,136 18,136 18,136 18,136
---------------- ---------------- -------------- ------------- ---------- ---------------
TOTAL ASSETS......... 5,706,502 2,491,526 6,699,209 6,545,685 2,531,134 1,738,284
---------------- ---------------- -------------- ------------- ---------- ---------------
LIABILITIES:
Collateral on securities
loaned................. 178,477 80,922 310,579 80,784 -- 241,246
Payable for Fund shares
redeemed............... 82 -- -- -- -- --
Payable for investment
securities purchased... -- -- 172,652 -- -- 25,284
Administration fee
payable................ 1,365 401 1,084 1,470 446 304
Shareholder servicing and
distribution fees
payable................ 3,412 -- -- 3,674 -- --
Transfer agent fees
payable................ 125 125 125 125 125 125
Custodian fees payable... 15,143 3,042 2,113 15,154 3,047 5,032
Accrued expenses and
other payables......... 6,954 4,986 6,626 7,168 5,079 4,788
---------------- ---------------- -------------- ------------- ---------- ---------------
TOTAL LIABILITIES.... 205,558 89,476 493,179 108,375 8,697 276,779
---------------- ---------------- -------------- ------------- ---------- ---------------
NET ASSETS............... $5,500,944 $2,402,050 $6,206,030 $6,437,310 $2,522,437 $1,461,505
---------------- ---------------- -------------- ------------- ---------- ---------------
---------------- ---------------- -------------- ------------- ---------- ---------------
Investments at cost...... $5,630,037 $2,323,031 $5,758,775 $6,252,738 $2,510,984 $1,491,274
---------------- ---------------- -------------- ------------- ---------- ---------------
---------------- ---------------- -------------- ------------- ---------- ---------------
NET ASSETS CONSIST OF:
Paid in capital.......... $5,635,068 $2,374,543 $5,681,091 $6,252,622 $2,537,180 $1,488,309
Undistributed net
investment income...... 6,516 2,748 9,256 16,546 4,956 7,309
Accumulated net realized
gain on investments,
written options and
foreign currency
transactions........... 6,094 (5,341) 68,393 5,009 202 4,370
Net unrealized
appreciation
(depreciation) of
investments and assets
and liabilities in
foreign currencies..... (146,734) 30,100 447,290 163,133 (19,901) (38,483)
---------------- ---------------- -------------- ------------- ---------- ---------------
TOTAL REPRESENTING
NET ASSETS
APPLICABLE TO
CAPITAL SHARES
OUTSTANDING........ $5,500,944 $2,402,050 $6,206,030 $6,437,310 $2,522,437 $1,461,505
---------------- ---------------- -------------- ------------- ---------- ---------------
---------------- ---------------- -------------- ------------- ---------- ---------------
Shares outstanding....... 564,053 236,586 550,775 623,516 253,596 149,298
Net asset value, offering
and redemption price
per share.............. $ 9.75 $ 10.15 $ 11.27 $ 10.32 $ 9.95 $ 9.79
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
53
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE PERIOD MARCH 27, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL
GROWTH FOCUSED EQUITIES
PORTFOLIO PORTFOLIO
------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (Net of
foreign withholding
taxes of $1,401,
$220, $0, $0, $77,
$0, $0, and $0,
respectively)........ $ 7,217 $ 9,315
Interest............... 2,719 14,878
------------- --------
Total investment
income............. 9,936 24,193
------------- --------
EXPENSES:
Investment advisory
fees................. 2,796 10,942
Custodian fees......... 5,033 2,135
Trustees fees and
expenses............. 2,248 3,708
Administration fees.... 310 1,287
Distribution fees...... 777 3,218
Professional fees...... 4,405 5,153
Amortization of
organization costs... 955 955
Other.................. 522 1,769
------------- --------
Total expenses....... 17,046 29,167
Fees waived and
expenses reimbursed
by investment
adviser, sub-adviser
and distributor...... (13,162) (15,068)
------------- --------
Net expenses........... 3,884 14,099
------------- --------
NET INVESTMENT
INCOME............... 6,052 10,094
------------- --------
Net realized gain
(loss) on
investments.......... 855 72,193
Net realized gain on
written options...... -- 2,494
Net realized gain on
foreign currency
transactions......... 3,940 --
Net change in
unrealized
appreciation
(depreciation) on
investments and
assets and
liabilities in
foreign currencies... 12,011 607,081
------------- --------
Net realized and
unrealized gain
(loss) on
investments.......... 16,806 681,768
------------- --------
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS........... $ 22,858 $691,862
------------- --------
------------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
54
<PAGE>
<TABLE>
<CAPTION>
MANAGED DISCIPLINED MANAGED
SMALLCAP INDEX EQUITY GROWTH & INCOME INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (Net of
foreign withholding
taxes of $1,401,
$220, $0, $0, $77,
$0, $0, and $0,
respectively)........ $ 14,262 $ 6,256 $ 10,846 $ 25,078
Interest............... 2,490 498 10,330 2,490
-------------- ------------ -------- ------------
Total investment
income............. 16,752 6,754 21,176 27,568
-------------- ------------ -------- ------------
EXPENSES:
Investment advisory
fees................. 6,824 3,008 9,214 7,348
Custodian fees......... 15,143 3,042 2,113 15,154
Trustees fees and
expenses............. 4,163 2,252 3,419 4,288
Administration fees.... 1,365 401 1,084 1,470
Distribution fees...... 3,412 1,003 2,710 3,674
Professional fees...... 5,213 4,474 4,997 5,293
Amortization of
organization costs... 955 955 955 955
Other.................. 1,866 637 1,510 2,001
-------------- ------------ -------- ------------
Total expenses....... 38,941 15,772 26,002 40,183
Fees waived and
expenses reimbursed
by investment
adviser, sub-adviser
and distributor...... (28,705) (11,766) (14,082) (29,161)
-------------- ------------ -------- ------------
Net expenses........... 10,236 4,006 11,920 11,022
-------------- ------------ -------- ------------
NET INVESTMENT
INCOME............... 6,516 2,748 9,256 16,546
-------------- ------------ -------- ------------
Net realized gain
(loss) on
investments.......... 6,094 (5,341) 65,899 5,009
Net realized gain on
written options...... -- -- 2,494 --
Net realized gain on
foreign currency
transactions......... -- -- -- --
Net change in
unrealized
appreciation
(depreciation) on
investments and
assets and
liabilities in
foreign currencies... (146,734) 30,100 447,290 163,133
-------------- ------------ -------- ------------
Net realized and
unrealized gain
(loss) on
investments.......... (140,640) 24,759 515,683 168,142
-------------- ------------ -------- ------------
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS........... $(134,124) $ 27,507 $524,939 $ 184,688
-------------- ------------ -------- ------------
-------------- ------------ -------- ------------
<CAPTION>
BALANCED
VALUE ASSETS
PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (Net of
foreign withholding
taxes of $1,401,
$220, $0, $0, $77,
$0, $0, and $0,
respectively)........ $ 9,393 $ 5,190
Interest............... 23 5,168
------------ ------------
Total investment
income............. 9,416 10,358
------------ ------------
EXPENSES:
Investment advisory
fees................. 3,345 2,278
Custodian fees......... 3,047 5,032
Trustees fees and
expenses............. 2,496 2,213
Administration fees.... 446 304
Distribution fees...... 1,115 759
Professional fees...... 4,509 4,400
Amortization of
organization costs... 955 955
Other.................. 694 513
------------ ------------
Total expenses....... 16,607 16,454
Fees waived and
expenses reimbursed
by investment
adviser, sub-adviser
and distributor...... (12,147) (13,405)
------------ ------------
Net expenses........... 4,460 3,049
------------ ------------
NET INVESTMENT
INCOME............... 4,956 7,309
------------ ------------
Net realized gain
(loss) on
investments.......... 202 4,370
Net realized gain on
written options...... -- --
Net realized gain on
foreign currency
transactions......... -- --
Net change in
unrealized
appreciation
(depreciation) on
investments and
assets and
liabilities in
foreign currencies... (19,901) (38,483)
------------ ------------
Net realized and
unrealized gain
(loss) on
investments.......... (19,699) (34,113)
------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS........... $ (14,743) $ (26,804)
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
55
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 27, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH JUNE 30,
1998 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL FOCUSED
GROWTH EQUITIES
PORTFOLIO PORTFOLIO
------------ -------------
<S> <C> <C>
Net investment income... $ 6,052 $ 10,094
Net realized gain
(loss) on investments
and foreign currency
transactions......... 4,795 74,687
Net unrealized
appreciation/(depreciation)
on investments and assets
and liabilities in
foreign currencies... 12,011 607,081
------------ -------------
Net increase/(decrease)
in net assets
resulting from
operations........... 22,858 691,862
Increase in net assets
from Fund share
transactions......... 1,384,149 7,286,194
------------ -------------
Total increase in net
assets............... 1,407,007 7,978,056
NET ASSETS:
Beginning of Period.... 10,000 10,000
------------ -------------
End of Period.......... $ 1,417,007 $ 7,988,056
------------ -------------
------------ -------------
Undistributed net
investment income at
end of period.......... $ 6,052 $ 10,094
------------ -------------
------------ -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
<PAGE>
<TABLE>
<CAPTION>
MANAGED DISCIPLINED GROWTH MANAGED BALANCED
SMALLCAP INDEX EQUITY & INCOME INDEX VALUE ASSETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ----------------- -------------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net investment income... $ 6,516 $ 2,748 $ 9,256 $ 16,546 $ 4,956 $ 7,309
Net realized gain
(loss) on investments
and foreign currency
transactions......... 6,094 (5,341) 68,393 5,009 202 4,370
Net unrealized
appreciation/(depreciation)
on investments and assets
and liabilities in
foreign currencies... (146,734) 30,100 447,290 163,133 (19,901) (38,483)
-------------- ------------ ----------------- -------------- ------------------ -----------
Net increase/(decrease)
in net assets
resulting from
operations........... (134,124) 27,507 524,939 184,688 (14,743) (26,804)
Increase in net assets
from Fund share
transactions......... 5,615,068 2,364,543 5,671,091 6,232,622 2,527,180 1,478,309
-------------- ------------ ----------------- -------------- ------------------ -----------
Total increase in net
assets............... 5,480,944 2,392,050 6,196,030 6,417,310 2,512,437 1,451,505
NET ASSETS:
Beginning of Period.... 20,000 10,000 10,000 20,000 10,000 10,000
-------------- ------------ ----------------- -------------- ------------------ -----------
End of Period.......... $5,500,944 $ 2,402,050 $ 6,206,030 $ 6,437,310 $ 2,522,437 $ 1,461,505
-------------- ------------ ----------------- -------------- ------------------ -----------
-------------- ------------ ----------------- -------------- ------------------ -----------
Undistributed net
investment income at
end of period.......... $ 6,516 $ 2,748 $ 9,256 $ 16,546 $ 4,956 $ 7,309
-------------- ------------ ----------------- -------------- ------------------ -----------
-------------- ------------ ----------------- -------------- ------------------ -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
57
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY
FOR THE PERIOD MARCH 27, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH JUNE 30,
1998 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH
PORTFOLIO
-----------------------
SHARES AMOUNT
--------- -----------
<S> <C> <C>
Shares sold.............. 138,025 $ 1,384,416
Shares repurchased....... (26) (267)
--------- -----------
Net Increase............. 137,999 $ 1,384,149
--------- -----------
--------- -----------
GROWTH & INCOME
PORTFOLIO
-----------------------
SHARES AMOUNT
------ ---------
Shares sold.............. 551,826 $ 5,693,099
Shares repurchased....... (2,051) (22,008)
--------- -----------
Net Increase............. 549,775 $ 5,671,091
--------- -----------
--------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
<PAGE>
<TABLE>
<CAPTION>
FOCUSED EQUITIES MANAGED SMALLCAP INDEX DISCIPLINED EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.............. 695,165 $ 7,286,194 562,090 $ 5,615,419 235,602 $ 2,364,706
Shares repurchased....... -- -- (37) (351) (16) (163)
--------- ----------- --------- ----------- --------- -----------
Net Increase............. 695,165 $ 7,286,194 562,053 $ 5,615,068 235,586 $ 2,364,543
--------- ----------- --------- ----------- --------- -----------
--------- ----------- --------- ----------- --------- -----------
MANAGED INDEX
PORTFOLIO VALUE PORTFOLIO BALANCED PORTFOLIO
---------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ --------- ------ --------- ------ ---------
Shares sold.............. 621,535 $ 6,232,815 252,618 $ 2,527,403 148,310 $ 1,478,425
Shares repurchased....... (19) (193) (22) (223) (12) (116)
--------- ----------- --------- ----------- --------- -----------
Net Increase............. 621,516 $ 6,232,622 252,596 $ 2,527,180 148,298 $ 1,478,309
--------- ----------- --------- ----------- --------- -----------
--------- ----------- --------- ----------- --------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
59
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET NET REALIZED
VALUE NET AND UNREALIZED
BEGINNING INVESTMENT GAIN/(LOSS) ON
OF PERIOD INCOME INVESTMENTS
--------- ---------- --------------
<S> <C> <C> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Period ended
6/30/98*............. $10.00 $ .04 $ .15
FOCUSED EQUITIES
PORTFOLIO
Period ended
6/30/98*............. 10.00 .01 1.46
MANAGED SMALLCAP INDEX
PORTFOLIO
Period ended
6/30/98*............. 10.00 .01 (.26)
DISCIPLINED EQUITY
PORTFOLIO
Period ended
6/30/98*............. 10.00 .01 .14
GROWTH & INCOME PORTFOLIO
Period ended
6/30/98*............. 10.00 .02 1.25
MANAGED INDEX PORTFOLIO
Period ended
6/30/98*............. 10.00 .03 .29
VALUE PORTFOLIO
Period ended
6/30/98*............. 10.00 .02 (.07)
BALANCED ASSETS PORTFOLIO
Period ended
6/30/98*............. 10.00 .05 (.26)
</TABLE>
- ------------------------------
* Portfolio commenced operations on March 27, 1998. Shares were offered to the
public on April 6, 1998.
+ Total return represents aggregate total return for the period indicated.
++ Annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
<PAGE>
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
NET INCREASE NET ASSETS OPERATING INVESTMENT
(DECREASE) IN NET ASSET END OF EXPENSES TO INCOME TO
NET ASSET VALUE VALUE END TOTAL PERIOD AVERAGE NET AVERAGE NET
FROM OPERATIONS OF PERIOD RETURN+ (000S) ASSETS++ ASSETS++
--------------- --------- ------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Period ended
6/30/98*............. $ .19 $10.19 1.90% $1,417 1.25% 1.95%
FOCUSED EQUITIES
PORTFOLIO
Period ended
6/30/98*............. 1.47 11.47 14.70 7,988 1.10 .78
MANAGED SMALLCAP INDEX
PORTFOLIO
Period ended
6/30/98*............. (.25) 9.75 (2.50) 5,501 .75 .48
DISCIPLINED EQUITY
PORTFOLIO
Period ended
6/30/98*............. .15 10.15 1.50 2,402 1.00 .69
GROWTH & INCOME PORTFOLIO
Period ended
6/30/98*............. 1.27 11.27 12.70 6,206 1.10 .85
MANAGED INDEX PORTFOLIO
Period ended
6/30/98*............. .32 10.32 3.20 6,437 .75 1.13
VALUE PORTFOLIO
Period ended
6/30/98*............. (.05) 9.95 (.50) 2,522 1.00 1.11
BALANCED ASSETS PORTFOLIO
Period ended
6/30/98*............. (.21) 9.79 (2.10) 1,462 1.00 2.41
<CAPTION>
WITHOUT
WAIVERS
AND/OR
EXPENSE
REIMBURSEMENTS
RATIO OF
OPERATING
PORTFOLIO EXPENSES TO
TURNOVER AVERAGE NET
RATE ASSETS++
-------- -----------
<S> <C> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Period ended
6/30/98*............. 164% 5.49%
FOCUSED EQUITIES
PORTFOLIO
Period ended
6/30/98*............. 59 2.27
MANAGED SMALLCAP INDEX
PORTFOLIO
Period ended
6/30/98*............. 5 2.85
DISCIPLINED EQUITY
PORTFOLIO
Period ended
6/30/98*............. 10 3.93
GROWTH & INCOME PORTFOLIO
Period ended
6/30/98*............. 52 2.40
MANAGED INDEX PORTFOLIO
Period ended
6/30/98*............. 3 2.73
VALUE PORTFOLIO
Period ended
6/30/98*............. 14 3.72
BALANCED ASSETS PORTFOLIO
Period ended
6/30/98*............. 14 5.42
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
61
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
Nations Annuity Trust (the "Trust"), was organized as a Delaware business
trust on February 5, 1998 and commenced operations March 27, 1998. The Trust
registered under the Investment Company Act of 1940, as amended, as an open-
end management investment company whose shares are offered in the following
eight portfolios: Nations Balanced Assets Portfolio, Nations Disciplined
Equity Portfolio, Nations International Growth Portfolio, Nations Managed
Index Portfolio, Nations Managed SmallCap Index Portfolio, Nations Marisco
Focused Equities Portfolio, Nations Marisco Growth & Income Portfolio and
Nations Value Portfolio (individually, a "Portfolio", collectively the
"Portfolios"). The Portfolios are made available only to variable annuity
and variable life separate accounts issued by participating life insurance
companies. Each Portfolio has distinct investment objectives as follows:
<TABLE>
<S> <C> <C>
International Growth -- Seeks long-term capital growth by investing primarily in equity
securities of companies domiciled in countries outside of the United
States and listed on major stock exchanges primarily in Europe and the
Pacific Basin.
Focused Equities -- Seeks long-term growth of capital.
Managed SmallCap -- Seeks over the long-term, to provide a total return which (gross of
fees and expenses) exceeds the total return of the Standard & Poor's
SmallCap 600 Index.(1)
Disciplined Equity -- Seeks growth of capital by investing in companies that are expected to
produce significant increases in earnings per share.
Growth & Income -- Seeks long-term growth of capital with a limited emphasis on income.
Managed Index -- Seeks over the long-term, to provide a total return which (gross of
fees and expenses) exceeds the total return of the Standard & Poor's
500 Composite Stock Price Index.(2)
Value -- Seeks growth of capital by investing in companies that are believed to
be undervalued.
Balanced Assets -- Seeks total return by investing in equity and fixed income securities.
</TABLE>
(1) Standard & Poor's SmallCap 600 Index is a registered service mark of
Standard & Poor's Corporation, a division of The McGraw-Hill Companies,
Inc. ("S&P").
(2) Standard & Poor's 500 is a registered service mark of S&P.
1. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolios in the preparation of their financial statements.
SECURITIES VALUATION--The Portfolios' securities that are traded on a
recognized stock exchange or on the NASDAQ system are valued at the last
sales price on the securities exchange or market on which such securities
are primarily traded. Securities traded only on over-the-counter markets
(other than on the NASDAQ system) are valued at the closing over-the-counter
bid prices or, if no sale occurred on such day, at the mean of the current
bid and asked prices. Certain securities may be valued by one or more
principal market makers. Restricted securities, securities for which market
quotations are not readily available, and certain other assets are valued by
the investment adviser under the supervision of the Board of Trustees.
Short-term investments that mature in 60 days or less are valued at
amortized cost.
FOREIGN CURRENCY TRANSLATION--The books and records of the Portfolios are
maintained in U.S. dollars. Foreign currencies, investments and other assets
and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period. Purchases and sales of investment
securities, income and expenses are translated on the respective dates of
such transactions. Net realized foreign currency gains and losses resulting
from changes in exchange rates include foreign currency gains and losses
between trade date and settlement date of investment securities
transactions, foreign currency transactions and the difference between the
amounts of interest and dividends recorded on the books of a Portfolio and
the amounts actually received. The effects of changes in foreign currency
exchange rates on investments in securities are
62
<PAGE>
not segregated in the Statements of Operations from the effects of changes
in market prices of those securities, but are included with the net realized
and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY TRANSACTIONS--Generally, a Portfolio may enter into
forward currency exchange contracts only under two circumstances: (i) when
the Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, to "lock" in the U.S. exchange rate of
the transaction, with such period being a short-dated contract covering the
period between transaction date and settlement date; and (ii) when the
investment adviser or sub-adviser believes that the currency of a particular
foreign country may experience a substantial movement against the U.S.
dollar.
Forward foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the
Portfolio as an unrealized gain or loss. When the contract is closed or
offset with the same counterparty, the Portfolio records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed or offset. Forward
foreign currency contracts will be used primarily to protect the Portfolios
from adverse currency movements and will generally not be entered into for
terms greater than one year. The use of forward foreign contracts does not
eliminate fluctuations in the underlying prices of the Portfolios'
investment securities, however, it does establish a rate of exchange that
can be achieved in the future.
The use of forward contracts involves the risk that anticipated currency
movements will not be accurately predicted. A forward contract would limit
the risk of loss due to decline in the value of a particular currency,
however, it also would limit any potential gain that might result should the
value of the currency increase instead of decrease. These contracts may
involve market risk in excess of the unrealized gain or loss reflected in
the Statements of Assets and Liabilities. In addition, a Portfolio could be
exposed to risks if counterparties to the contracts are unable to meet the
terms of their contracts. The counterparty risk exposure is, therefore,
closely monitored and contracts are only executed with high credit quality
financial institutions.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME--Securities transactions are
accounted for on a trade date basis. Realized gains and losses are computed
based on the specific identification of the securities sold. Interest
income, adjusted for accretion of discounts and amortization of premiums, is
earned from settlement date and is recorded on an accrual basis. Dividend
income is recorded on the ex-dividend date, except that certain dividends
from foreign securities are recorded as soon as the Portfolios are informed
of the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net
investment income are declared and paid annually by the Portfolios.
Each Portfolio will distribute net realized capital gains (including net
short-term capital gains), annually after the fiscal year in which the
capital gains were earned, unless offset by any available capital loss
carryforward. Income distributions and capital gain distributions on a
Portfolio level are determined in accordance with Federal income tax
regulations that may differ from generally accepted accounting principles.
FEDERAL INCOME TAX-- Each Portfolio intends to qualify as regulated
investment company by complying with the requirements of the Internal
Revenue Code of 1986, as amended, and by distributing substantially all of
its earnings to its shareholders.
Therefore, no Federal income or excise tax provision is applicable. The
Portfolios may be subject to foreign taxes on income, gains on investments
or currency repatriation, a portion of which may be recoverable. The
Portfolios will accrue such taxes and recoveries as applicable, based upon
their current interpretation of tax rules and regulations that exist in the
markets in which they invest.
EXPENSES--General expenses of the Trust are allocated to the relevant
Portfolios based upon relative net assets. Operating expenses directly
attributable to a Portfolio are charged to such Portfolio's operations.
Costs incurred by the Portfolios in connection with their organization have
been deferred and are being amortized from the commencement of operations on
a straight line basis over the period of benefit not to exceed sixty months.
63
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS
The Trust has, on behalf of the Portfolios, entered into an investment
advisory agreement (the "Investment Advisory Agreement") with NationsBanc
Advisors, Inc. ("NBAI"), a wholly owned subsidiary of NationsBank, N.A.
("NationsBank"), pursuant to which NBAI provides investment advisory
services to the Portfolios. Under the terms of this Investment Advisory
Agreement, NBAI is entitled to receive an advisory fee calculated daily and
payable monthly based on the following annual rates multiplied by the
average daily net assets of each Portfolio:
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
- ------------------------------------------------------------------------------------------------------------------- -------------
<S> <C>
International Growth............................................................................................... 0.90%
Focused Equities................................................................................................... 0.85%
Managed SmallCap Index............................................................................................. 0.50%
Disciplined Equity................................................................................................. 0.75%
Growth & Income.................................................................................................... 0.85%
Managed Index...................................................................................................... 0.50%
Value.............................................................................................................. 0.75%
Balanced Assets.................................................................................................... 0.75%
</TABLE>
The Trust has, on behalf of the Portfolios listed below entered into a
sub-advisory agreement with NBAI and TradeStreet Investment Associates, Inc.
("TradeStreet"), a wholly-owned subsidiary of NationsBank, pursuant to which
TradeStreet is entitled to receive a sub-advisory fee from NBAI at the
following annual rates of each Portfolio's average daily net assets.
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
- ------------------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Managed Index, Managed SmallCap Index.............................................................................. 0.10%
Value, Balanced Assets, Disciplined Equity......................................................................... 0.25%
</TABLE>
The Trust has, on behalf of the Focused Equities and Growth & Income
Portfolios, entered into a sub-advisory agreement with NBAI and Marsico
Capital Management, LLC ("Marsico Capital"), pursuant to which Marsico
Capital is entitled to receive a sub-advisory fee from NBAI at the annual
rate of 0.45% of each Portfolio's average daily net assets.
The Trust has, on behalf of the International Growth Portfolio, entered into
a sub-advisory agreement with NBAI and Gartmore Global Partners
("Gartmore"), pursuant to which Gartmore is entitled to receive a
sub-advisory fee from NBAI at the annual rate of 0.70% of the Portfolio's
average daily net assets. Gartmore is a joint venture structured as a
general partnership between NB Partner Corp., a wholly-owned subsidiary of
NationsBank and Gartmore U.S. Limited, an indirect wholly-owned subsidiary
of Gartmore Investment Management PLC ("Gartmore PLC"), which is a United
Kingdom ("U.K.") holding company for a leading U.K.-based international fund
management group of companies. National Westminster Bank PLC and its
affiliated entities own 100% of the equity of Gartmore PLC.
Stephens Inc. ("Stephens") serves as the distributor of the Portfolios'
shares and administrator of the Trust. First Data Investor Services Group,
Inc. ("First Data"), a wholly owned subsidiary of First Data Corporation,
serves as the Co-administrator of the Trust. Stephens and First Data are
entitled to receive a combined fee, computed daily and paid monthly, at the
annual rate of 0.10% of each Portfolio's average net assets. NBAI is the
sub-administrator of the Trust pursuant to a sub-administration agreement
with Stephens and is entitled to an annual fee from the administrator of
.01% of each Portfolio's average net assets.
64
<PAGE>
The investment adviser, sub-adviser and distributor may, from time to time,
voluntarily reduce their fees payable by each Portfolio. For the period
ended June 30, 1998, the fees waived and reimbursed were as follows:
<TABLE>
<CAPTION>
FEES WAIVED
FEES WAIVED FEES REIMBURSED BY
PORTFOLIO BY ADVISER BY ADVISER DISTRIBUTOR
- ----------------------------------------------------------------------------------- ----------- --------------- -------------
<S> <C> <C> <C>
International Growth............................................................... $ 2,796 $ 9,589 $ 777
Focused Equities................................................................... 10,942 908 3,218
Managed SmallCap Index............................................................. 6,824 21,881 --
Disciplined Equity................................................................. 3,008 7,755 1,003
Growth & Income.................................................................... 9,214 2,158 2,710
Managed Index...................................................................... 7,348 21,813 --
Value.............................................................................. 3,345 7,687 1,115
Balanced Assets.................................................................... 2,278 10,368 759
</TABLE>
NationsBank and collectively with The Bank of New York ("BONY"), (called
"Custodians"), serve as custodian for the assets of all the Portfolios,
except Nations International Growth Portfolio. BONY, Belgium, serves as
Custodian for the assets of the International Growth Portfolio.
The Trust pays each unaffiliated Trustee an annual fee of $1,000 ($3,000 for
the Chairman of the Board), plus $500 per Portfolio and an additional $1,000
for each in-person board meeting, and $500 for each telephonic board meeting
attended. The Trust also reimburses expenses incurred by each unaffiliated
Trustee in attending such meetings.
The Trust's eligible Trustees may participate in non-qualified deferred
compensation and retirement plans that may be terminated at any time. All
benefits provided under these plans are unfunded and any payment to plan
participants is paid solely out of the Portfolios' assets. Income earned on
each plan participant's deferral account is tied to the rate of return of
Nations Treasury Fund, a portfolio of Nations Fund, Inc. The expense for the
deferred compensation and retirement plans is included in "Trustees fees and
expenses" in the Statements of Operations.
The Portfolios have made daily investments of cash balances in Nations Cash
Reserves, a portfolio of Nations Institutional Reserves, pursuant to an
exemptive order received from the Securities and Exchange Commission. For
the period ended June 30, 1998, the Portfolios earned $16,053 in the
aggregate from such investments.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLANS
The Portfolios have adopted a Shareholder Servicing and Distribution Plan
(the "Servicing and Distribution Plan") pursuant to rule 12b-1 under the
1940 Act. Payments under the Servicing and Distribution Plan are calculated
daily and paid monthly at a rate not exceeding 0.25% (on an annualized
basis) of the average daily net asset value of the Shares beneficially owned
through the ownership of Contracts by customers with whom the Selling and
Servicing Agents have a relationship.
4. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities,
excluding U.S. government securities and short-term investments, for the
period ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ----------------------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
International Growth................................................................................. $ 3,178,397 $ 1,951,371
Focused Equities..................................................................................... 8,411,621 1,996,083
Managed SmallCap Index............................................................................... 5,486,513 185,035
Disciplined Equity................................................................................... 2,391,826 119,547
Growth & Income...................................................................................... 6,678,500 1,597,932
Managed Index........................................................................................ 5,847,079 142,815
Value................................................................................................ 2,642,403 191,547
Balanced Assets...................................................................................... 1,035,791 69,078
</TABLE>
65
<PAGE>
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
The aggregate cost of purchases and proceeds from sales of long-term U.S.
government securities for the period ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ---------------------------------------------------------------------------------------------------------- ---------- ---------
<S> <C> <C>
Balanced Assets........................................................................................... $ 502,958 $ 42,338
</TABLE>
5. SHARES OF BENEFICIAL INTEREST/CAPITAL STOCK
At June 30, 1998, an unlimited number of shares of beneficial interest
without par value were authorized for the Trust. At June 30, 1998, Hartford
Life Insurance Company owned the following percentage of shares outstanding:
<TABLE>
<CAPTION>
PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
International Growth...........................................................................................
Focused Equities...............................................................................................
Managed SmallCap Index.........................................................................................
Disciplined Equity.............................................................................................
Growth & Income................................................................................................
Managed Index..................................................................................................
Value..........................................................................................................
Balanced Assets................................................................................................
<CAPTION>
PORTFOLIO % OF SHARES HELD
- --------------------------------------------------------------------------------------------------------------- -------------------
- --
<S> <C>
International Growth........................................................................................... 72%
Focused Equities............................................................................................... 43
Managed SmallCap Index......................................................................................... 89
Disciplined Equity............................................................................................. 42
Growth & Income................................................................................................ 54
Managed Index.................................................................................................. 80
Value.......................................................................................................... 39
Balanced Assets................................................................................................ 67
</TABLE>
6. WRITTEN OPTIONS
Each Portfolio may invest in written options. These investments involve, to
varying degrees, elements of market risk and risks in excess of the amount
recognized in the Statement of Assets and Liabilities.
<TABLE>
<CAPTION>
GROWTH
& INCOME FOCUSED EQUITIES
--------------------- ---------------------
NUMBER OF NUMBER OF
SUMMARY OF WRITTEN OPTIONS CONTRACTS PREMIUM CONTRACTS PREMIUM
- ------------------------------------------------------------------------------------ ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Outstanding at March 27, 1998....................................................... -- -- -- --
Contracts opened.................................................................. 200 $ 3,690 200 $ 3,690
Contracts closed.................................................................. (200) (3,690) (200) (3,690)
--- -------- --- --------
Outstanding at June 30, 1998........................................................ 0 $ 0 0 $ 0
--- -------- --- --------
--- -------- --- --------
</TABLE>
7. LINE OF CREDIT
The Trust participates in an uncommitted line of credit provided by BONY
under a line of credit agreement (the "Agreement"). Advances under the
Agreement are taken primarily for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. Interest on borrowings is payable at the federal
funds rate plus 0.50% on an annualized basis. The Agreement requires, among
other things, that each participating Portfolio maintain a ratio of no less
than 4 to 1 net assets (not including funds borrowed pursuant to the
Agreement) to aggregate amount of indebtedness pursuant to the Agreement.
For the period ended June 30, 1998, there were no borrowings by the
Portfolios under the Agreement
8. LENDING OF PORTFOLIO SECURITIES
Under an agreement with BONY, the Portfolios have the ability to lend their
securities to approved brokers, dealers and other financial institutions.
Loans of portfolio securities are collateralized by cash, in an amount at
least equal to the market value of the securities on loan. The cash
collateral received is invested in Nations Cash Reserves, a portfolio of
Nations Institutional Reserves. A portion of the income generated by the
investment of the collateral, net of any rebate paid by BONY to borrowers,
is remitted to BONY as lending agent, and the remainder is paid to the
Portfolio. Generally, in the event of counterparty default, the Portfolio
has the right to use the collateral to offset losses incurred. There would
be a potential loss to the Portfolio in the event the Portfolio is delayed
or prevented from exercising its right to dispose of the collateral. The
Portfolio bears risk in the event that invested collateral is not sufficient
to meet obligations due on the loans.
66
<PAGE>
At June 30, 1998, the following Portfolios had securities on loan.
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
LOANED OF
PORTFOLIO SECURITIES COLLATERAL
- ------------------------------------------------------------------------------------------------ ---------------- ------------
<S> <C> <C>
Focused Equities................................................................................ $ 369,017 $ 382,933
Managed SmallCap Index.......................................................................... 170,329 178,477
Disciplined Equity.............................................................................. 78,089 80,922
Growth & Income................................................................................. 298,728 310,579
Managed Index................................................................................... 78,156 80,784
Balanced Assets................................................................................. 236,108 241,246
</TABLE>
67
<PAGE>
[This page is intentionally left blank]
<PAGE>
HARTFORD BOND HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 3.8%
Capital Lease Funding Securitization, Series
1997-CTL1, Class A1
$ 7,039,221 7.42% due 06/22/24............................. $ 7,254,797
Chemical Master Credit Card Trust, Series 96-1,
Class A
11,400,000 5.55% due 09/15/03............................. 11,348,358
Oakwood Mortgage Investors, Inc. Series 94-A,
Class B1
1,465,871 8.40% due 02/15/15............................. 1,493,371
PG & E 97-1 A6
3,600,000 6.32% due 09/25/05............................. 3,662,964
Sce Funding LLC Series 1997-1 A3
3,250,000 6.17% due 03/25/03............................. 3,279,575
------------
Total asset-backed securities..................... $ 27,039,065
------------
------------
CORPORATE BONDS & NOTES -- 51.6%
CHEMICALS -- 1.0%
du Pont (E.I.) Nemours & Co.
5,700,000 6.75% due 09/01/07............................. 5,957,816
Terra Industries, Inc.
1,225,000 10.50% due 06/15/05............................. 1,319,937
------------
7,277,753
------------
COLLEGES AND UNIVERSITIES -- 1.5%
Massachusetts Institute of Technology
5,500,000 7.25% due 11/02/96............................. 6,367,377
Yale University
3,500,000 7.37% due 04/15/96............................. 4,154,454
------------
10,521,831
------------
COMMUNICATIONS EQUIPMENT -- 0.7%
Comcast Cellular
4,575,000 9.50% due 05/01/07............................. 4,769,437
------------
CONSUMER DURABLES -- 0.9%
Fred Meyer, Inc.
6,000,000 7.37% due 03/01/05............................. 6,046,716
------------
ENERGY & SERVICES -- 1.5%
Tenneco, Inc.
6,850,000 8.20% due 01/15/99............................. 7,037,806
Union Oil Co. of California
2,500,000 9.38% due 02/15/11............................. 3,171,372
------------
10,209,178
------------
FINANCIAL SERVICES -- 14.3%
Abbey National First Capital (Yankee)
12,545,000 8.20% due 10/15/04............................. 13,843,959
Ahmanson (H.F.) & Co.
5,500,000 6.35% due 09/01/98............................. 5,508,497
Allstate Corp.
1,765,000 6.75% due 05/15/18............................. 1,809,808
Amvescap PLC
7,500,000 6.60% due 05/15/05............................. 7,579,402
BellSouth Capital Funding
7,500,000 7.12% due 07/15/97............................. 8,301,787
Buckeye Cellulos
300,000 8.50% due 02/15/05............................. 306,000
Chase Manhattan Corp.
3,000,000 7.75% due 11/01/99............................. 3,071,073
Dime Bancorp, Inc. Senior Notes
3,000,000 10.50% due 01/15/05............................. 3,180,000
Duke Realty LP
5,000,000 7.25% due 09/22/02............................. 5,174,330
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<C> <S> <C>
CORPORATE BONDS & NOTES -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
Equity Residential
$ 3,700,000 7.12% due 10/15/17............................. $ 3,743,704
General Motors Acceptance Corp.
4,000,000 5.87% due 01/12/99............................. 3,999,088
General Motors Acceptance Corp.
5,500,000 6.88% due 07/15/01............................. 5,634,634
General Motors Acceptance Corp.
1,000,000 6.66% due 01/17/03............................. 1,018,020
Landeskreditbank Baden-Wuerttemberg
7,900,000 7.62% due 02/01/23............................. 9,276,551
Lehman Brothers, Inc.
3,000,000 10.00% due 05/15/99............................. 3,096,729
Lehman Brothers, Inc.
2,850,000 8.87% due 03/01/02............................. 3,094,232
Massachusetts Mutual Life Insurance Co.*
11,750,000 7.62% due 11/15/23............................. 13,300,776
Phoenix Home Life Insurance Co.*
2,750,000 6.95% due 12/01/06............................. 2,843,599
Swiss Bank Corporation-NY
1,000,000 7.37% due 06/15/17............................. 1,110,368
Trenwick Group
4,300,000 6.70% due 04/01/03............................. 4,340,054
Westinghouse Credit Corp.
3,000,000 8.87% due 06/14/14............................. 3,382,653
------------
100,544,191
------------
FOOD, BEVERAGE & TOBACCO -- 1.4%
Ralcorp Holdings
7,400,000 8.75% due 09/15/04............................. 8,427,371
RJR Nabisco, Inc.
1,350,000 8.50% due 07/01/07............................. 1,354,591
------------
9,781,962
------------
HEALTH CARE -- 1.2%
Columbia Healthcare
1,675,000 7.50% due 02/15/23............................. 1,582,203
Columbia/HCA Healthcare
2,250,000 7.50% due 11/15/95............................. 2,086,931
Tenet Healthcare Corp.
4,600,000 8.13% due 12/01/08............................. 4,628,750
------------
8,297,884
------------
HOTELS & GAMING -- 0.2%
Boyd Gaming Corporation
1,600,000 9.50% due 07/15/07............................. 1,640,000
------------
INDUSTRIAL -- 4.5%
American Standard Companies
4,050,000 7.37% due 04/15/05............................. 4,035,792
American Standard Companies
4,600,000 7.37% due 02/01/08............................. 4,502,250
Borden Chemical
500,000 9.50% due 05/01/05............................. 500,000
Domtar, Inc.
2,550,000 9.50% due 08/01/16............................. 2,833,567
Jones Intercable, Inc.
2,000,000 7.62% due 04/15/08............................. 2,020,000
Loewen Group International, Inc.
3,900,000 8.25% due 10/15/03............................. 4,050,501
Newport News Shipbuilding, Inc.
2,000,000 8.62% due 12/01/06............................. 2,105,000
Owens-Illinois, Inc.
1,000,000 8.10% due 05/15/07............................. 1,067,844
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-1
<PAGE>
HARTFORD BOND HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<C> <S> <C>
CORPORATE BONDS & NOTES -- (CONTINUED)
INDUSTRIAL -- (CONTINUED)
Placer Dome, Inc.
$ 6,200,000 7.12% due 06/15/07............................. $ 6,275,088
U.S. Home Group
1,390,000 7.95% due 03/01/01............................. 1,418,917
US Home Corp.
2,800,000 8.25% due 08/15/04............................. 2,828,000
------------
31,636,959
------------
INDUSTRIAL MATERIALS -- 0.1%
Tesoro Petroleum Corp.
1,000,000 9.00% due 07/01/08............................. 1,000,000
------------
MEDIA & SERVICES -- 3.2%
Continental Cablevision, Inc.
1,000,000 9.50% due 08/01/13............................. 1,190,831
Hollinger Intl Publishing
1,400,000 8.62% due 03/15/06............................. 1,463,000
News America Holdings, Inc.
6,500,000 7.70% due 10/30/25............................. 6,969,072
Lenfest Communications
1,000,000 8.38% due 11/01/05............................. 1,062,500
Rogers Cablesystems
2,995,000 9.63% due 08/01/02............................. 3,197,162
Time Warner Entertainment
3,019,000 8.87% due 10/01/12............................. 3,676,366
Turner Broadcasting
5,900,000 7.40% due 02/01/04............................. 6,165,151
------------
22,661,582
------------
RETAIL -- 3.9%
Kmart Corp.
750,000 7.75% due 10/01/12............................. 756,948
Kmart Corp.
5,000,000 8.96% due 02/10/19............................. 5,209,525
Kmart Corp.
4,000,000 12.50% due 03/01/05............................. 5,005,472
Kroger Co.
6,500,000 7.00% due 05/01/18............................. 6,665,041
Stop & Shop Companies, Inc.
8,585,000 9.75% due 02/01/02............................. 9,578,318
------------
27,215,304
------------
TRANSPORTATION -- 6.4%
Continental Airlines
4,430,000 9.50% due 02/15/01............................. 4,706,875
Continental Airlines*
13,874,192 7.46% due 04/01/13............................. 15,011,043
CSX Corp.
4,000,000 7.25% due 05/01/04............................. 4,191,124
Interpool, Inc.
1,100,000 7.35% due 08/01/07............................. 1,108,505
Northwest Airlines Trust, Series 2
2,376,001 11.30% due 06/21/14............................. 3,137,652
U.S. Air Inc., Series Class A
4,697,951 6.76% due 04/15/08............................. 4,867,547
United Air Lines
8,900,000 9.75% due 08/16/21............................. 11,886,136
------------
44,908,882
------------
TELECOMMUNICATIONS -- 2.5%
Lenfest Communications
1,000,000 8.38% due 11/01/05............................. 1,062,500
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<C> <S> <C>
CORPORATE BONDS & NOTES -- (CONTINUED)
TELECOMMUNICATIONS -- (CONTINUED)
Rogers Cantel, Inc.
$ 1,350,000 8.30% due 10/01/07............................. $ 1,323,000
Rogers Cantel, Inc.
1,150,000 9.38% due 06/01/08............................. 1,193,125
Rogers Cantel, Inc.
1,650,000 9.75% due 06/01/16............................. 1,724,250
TCI Communications, Inc.
3,500,000 7.88% due 08/01/13............................. 4,040,281
Tele-Communications
836,000 9.25% due 01/15/23............................. 961,241
Tele-Communications, Inc.
7,000,000 6.58% due 02/15/05............................. 7,629,174
------------
17,933,571
------------
UTILITIES -- 7.9%
Bell Telephone Co. of Pennsylvania
3,000,000 8.35% due 02/15/30............................. 3,800,055
Calpine Corporation
1,400,000 7.88% due 04/01/08............................. 1,396,500
Chesapeake & Potomac Telephone Co.
1,500,000 8.30% due 08/01/31............................. 1,907,694
Cleveland Electric Illuminating Co.
1,750,000 7.13% due 07/01/07............................. 1,855,260
El Paso Electric Co. --
4,500,000 8.90% due 02/01/06............................. 5,017,500
El Paso Electric Co.
1,200,000 9.40% due 05/01/11............................. 1,368,000
Long Island Lighting Co.
1,735,000 8.90% due 07/15/19............................. 1,840,137
Niagara Mohawk Power
6,850,000 7.25% due 10/01/02............................. 6,841,437
Niagara Mohawk Power
1,100,000 7.76% due 10/01/08............................. 1,128,875
Pacificorp
3,100,000 6.12% due 01/15/08............................. 3,089,494
Pacificorp
13,150,000 6.38% due 05/15/08............................. 13,226,611
Public Service El-IBC
4,000,000 7.00% due 09/01/24............................. 4,132,384
Public Service El-MBIA
7,000,000 6.75% due 01/01/16............................. 7,275,674
Public Service El-MBIA
1,400,000 6.75% due 01/01/16............................. 1,455,134
WorldCom, Inc.
1,100,000 8.87% due 01/15/06............................. 1,190,750
------------
55,525,505
------------
Total corporate bonds & notes..................... $363,041,828
------------
------------
FOREIGN BONDS -- 5.2%
FOREIGN CORPORATIONS -- 1.2%
Bayerische Landesbank (NY)
7,000,000 6.20% due 02/09/06............................. $ 7,011,354
Gulf Canada Resources
1,000,000 8.25% due 03/15/17............................. 1,101,929
------------
8,113,283
------------
FOREIGN GOVERNMENTS -- 4.0%
Ministry Finance Russia
6,750,000 10.00% due 06/26/07............................. 5,113,125
Republic of Argentina
2,875,000 5.50% due 03/31/23............................. 2,140,078
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<C> <S> <C>
FOREIGN BONDS -- (CONTINUED)
FOREIGN GOVERNMENTS -- (CONTINUED)
Republic of Colombia
$ 1,650,000 7.62% due 02/15/07............................. $ 1,480,378
Republic of Korea
1,625,000 8.87% due 04/15/08............................. 1,485,859
Republic of Panama
11,600,000 8.87% due 09/30/27............................. 10,940,250
Republic of Venezuela Discount Series A
2,000,000 6.75% due 03/31/20............................. 1,720,000
Republic of Venezuela Unsecured
7,150,000 9.25% due 09/15/27............................. 5,545,718
------------
28,425,408
------------
Total foreign bonds............................... $ 36,538,691
------------
------------
<CAPTION>
SHARES
-----------
<C> <S> <C>
PREFERRED STOCKS -- 0.5%
FINANCIAL SERVICES
156,000 Coastal Corporation (The)......................... $ 3,861,000
------------
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 32.2%
U.S. TREASURY BONDS -- 10.2%
$ 6,495,000 6.38% due 08/15/27............................. $ 7,134,354
4,380,000 6.50% due 11/15/26............................. 4,864,537
20,805,000 6.63% due 02/15/27............................. 23,503,158
5,433,074 6.88% due 08/15/26............................. 5,433,074
4,530,000 7.50% due 11/15/16............................. 5,438,831
10,600,000 7.63% due 02/15/25............................. 13,346,067
3,900,000 8.13% due 08/15/19............................. 5,033,437
5,100,000 8.75% due 05/15/17............................. 6,869,062
------------
71,622,520
------------
U.S. TREASURY INFLATION-INDEXED SECURITIES -- 3.9%
6,168,641 3.38% due 01/15/07............................. 6,129,151
21,699,909 3.63% due 7/15/02 - 04/15/28................... 21,550,952
------------
27,680,103
------------
U.S. TREASURY NOTES -- 7.4%
9,700,000 5.50% due 11/15/98............................. 9,703,036
3,400,000 5.63% due 12/31/99 - 05/15/08.................. 3,424,984
7,660,000 5.88% due 08/15/98 - 11/15/05.................. 7,747,756
12,900,000 6.13% due 08/31/98 - 11/15/27.................. 12,986,438
7,000,000 6.25% due 07/31/98 - 11/15/27.................. 7,094,441
4,190,000 6.50% due 08/15/05 - 10/15/06.................. 4,447,942
692,000 6.75% due 08/15/26............................. 792,340
3,280,000 6.88% due 08/31/99 - 05/15/06.................. 3,545,837
370,000 7.25% due 05/15/04............................. 401,450
1,500,000 7.50% due 10/31/99 - 11/15/24.................. 1,838,907
------------
51,983,131
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 9.7%
4,000,000 5.25% due 01/15/03............................. 3,939,680
55,444,615 6.00% due 07/01/12 - 06/01/28.................. 54,790,842
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- (CONTINUED)
FEDERAL NATIONAL MORTGAGE ASSOCIATION --
(CONTINUED)
$ 2,925,887 6.48% due 12/01/05............................. $ 2,997,395
6,466,709 6.50% due 10/01/12 - 07/25/28.................. 6,482,175
------------
68,210,092
------------
U.S. GOVERNMENT AGENCIES -- 1.0%
Israel AID (State of)
7,200,000 4.88% due 09/15/98............................. 7,184,800
------------
Total U.S. treasuries & federal agencies.......... $226,680,646
------------
------------
SHORT-TERM SECURITIES -- 5.1%
REPURCHASE AGREEMENT
36,197,000 Interest in $131,291,000 joint repurchase
agreement with State Street Bank dated 06/30/98
at 5.90%, to be repurchased at $36,202,932 on
07/01/98; (collateralized by $131,291,000 U.S.
Treasury Bonds 6.5% due 11/15/26)............... $ 36,197,000
------------
------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total asset-backed securities (cost $26,307,494)....... 3.8% $ 27,039,065
Total corporate bonds & notes (cost $347,478,382)...... 51.6 363,041,828
Total foreign bonds (cost $38,902,803)................. 5.2 36,538,691
Total preferred stocks (cost $3,900,000)............... 0.5 3,861,000
Total U.S. treasuries & federal agencies (cost
$222,432,120)........................................ 32.2 226,680,646
Total short-term securities (cost $36,197,000)......... 5.1 36,197,000
----- ------------
Total investment in securities
(total cost $675,217,799)............................ 98.4 693,358,230
Excess of cash, receivables and other assets over
liabilities.......................................... 1.6 10,287,792
----- ------------
Net assets............................................. 100.0% $703,646,022
----- ------------
----- ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 1,500,000,000 shares
authorized; 644,475,161 shares outstanding.................. $ 64,447,516
Capital surplus............................................... 597,887,088
Accumulated undistributed net investment income............... 18,601,995
Accumulated undistributed net realized gain on investments....
4,568,992
Unrealized appreciation of investments........................ 18,140,431
------------
Net assets.................................................... $703,646,022
------------
------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($702,486,673 DIVIDED BY
643,340,701 shares outstanding)...................... $1.09
-----
-----
Class IB
Net asset value per share ($1,159,349 DIVIDED BY
1,134,460 shares outstanding)........................ $1.02
-----
-----
</TABLE>
* Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At June 30, 1998, the market value
of these securities amounted to $31,155,418 or 4% of net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-3
<PAGE>
HARTFORD STOCK HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
COMMON STOCKS -- 93.8%
COMMUNICATIONS EQUIPMENT -- 4.0%
*225,000 Ciena Corporation................................. $ 15,665,625
*1,275,000 Cisco Systems, Inc................................ 117,379,687
1,000,000 Ericsson (L.M.) Telephone ADR..................... 28,625,000
1,000,000 Lucent Technologies, Inc.......................... 83,187,500
--------------
244,857,812
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 4.8%
1,150,000 Compaq Computer Corporation....................... 32,631,250
*1,518,600 EMC Corporation................................... 68,052,267
800,000 International Business Machines Corporation....... 91,850,000
1,050,000 Xerox Corporation................................. 106,706,250
--------------
299,239,767
--------------
CONSUMER NON-DURABLES -- 6.0%
795,000 Colgate Palmolive Company......................... 69,960,000
450,000 Estee Lauder Companies Class A.................... 31,359,375
1,450,000 Gillette Company (The)............................ 82,196,875
1,445,000 Kimberly-Clark Corporation........................ 66,289,375
1,300,000 Proctor & Gamble Company (The).................... 118,381,250
--------------
368,186,875
--------------
CONSUMER SERVICES -- 2.0%
*374,548 Autotote Corp. (Unregistered Shares).............. 646,095
700,000 Eastman Kodak Company............................. 51,143,750
*2,020,000 Mirage Resorts, Inc............................... 43,051,250
694,900 ServiceMaster Company (The)....................... 26,449,631
--------------
121,290,726
--------------
ELECTRONICS -- 6.3%
*550,000 Altera Corporation................................ 16,259,375
*935,000 Analog Devices, Inc............................... 22,965,937
*400,000 Applied Materials, Inc............................ 11,800,000
2,800,000 General Electric Company.......................... 254,800,000
1,120,000 Intel Corporation................................. 83,020,000
--------------
388,845,312
--------------
ENERGY & SERVICES -- 4.5%
575,000 Chevron Corporation............................... 47,760,937
800,000 Exxon Corporation................................. 57,050,000
1,600,000 Royal Dutch Petroleum Co. ADR..................... 87,700,000
1,250,000 Schlumberger Ltd. N.V............................. 85,390,625
--------------
277,901,562
--------------
FINANCIAL SERVICES -- 19.1%
720,000 Ace Ltd........................................... 28,080,000
1,000,000 American Express Co............................... 114,000,000
700,000 American International Group, Inc................. 102,200,000
1,050,000 Associates First Capital Corporation.............. 80,718,750
700,000 BankAmerica Corporation........................... 60,506,250
800,000 Citicorp.......................................... 119,400,000
300,000 Federal National Mortgage Association............. 18,225,000
1,000,000 First Union Corporation........................... 58,250,000
1,950,000 Marsh & McLennan Companies, Inc................... 117,853,125
138,200 Mellon Bank Corporation........................... 9,622,175
1,660,000 Merrill Lynch & Co., Inc.......................... 152,212,500
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
FINANCIAL SERVICES -- (CONTINUED)
375,000 NationsBank Corporation........................... $ 28,687,500
1,250,000 State Street Corporation.......................... 86,875,000
2,280,000 Travelers Group, Inc.............................. 138,225,000
1,500,000 U.S. Bancorp...................................... 64,500,000
--------------
1,179,355,300
--------------
FOOD, BEVERAGE & TOBACCO -- 3.7%
1,100,000 Coca-Cola Company (The)........................... 94,050,000
750,000 Nabisco Holdings Corporation...................... 27,046,875
1,150,000 PepsiCo, Inc...................................... 47,365,625
750,000 Unilever N.V.-New York Shares..................... 59,203,125
--------------
227,665,625
--------------
HEALTH CARE -- 13.6%
2,240,000 Abbott Laboratories............................... 91,560,000
2,100,000 American Home Products Corporation and
Subsidiaries.................................... 108,675,000
2,600,000 Columbia/HCA Healthcare Corporation............... 75,725,000
1,200,000 Johnson & Johnson................................. 88,500,000
920,000 Merck & Co., Inc.................................. 123,050,000
900,000 Pfizer, Inc....................................... 97,818,750
1,800,000 Pharmacia & Upjohn, Inc........................... 83,025,000
1,050,000 Service Corporation International................. 45,018,750
700,000 SmithKline Beecham PLC ADR........................ 42,350,000
*655,000 Tenet Healthcare Corporation...................... 20,468,750
960,000 Warner-Lambert Company............................ 66,600,000
--------------
842,791,250
--------------
INDUSTRIAL MATERIALS -- 0.2%
406,100 Santa Fe International Corporation................ 12,284,525
--------------
MANUFACTURING -- 0.9%
850,000 Perkin-Elmer Corporation (The).................... 52,859,375
--------------
MEDIA & SERVICES -- 5.2%
*650,000 Airtouch Communications, Inc...................... 37,984,375
*850,000 CBS Corporation................................... 26,987,500
*358,700 Clear Channel Communications, Inc................. 39,143,137
2,038,900 Gannett Co., Inc.................................. 144,889,331
700,000 Walt Disney Company (The)......................... 73,543,750
--------------
322,548,093
--------------
REAL ESTATE -- 0.1%
*6,150 Security Capital Group, Incorporated.............. 8,179,500
--------------
RETAIL -- 9.2%
2,046,000 CVS Corporation................................... 79,666,125
850,000 Gap, Inc.......................................... 52,381,250
1,252,500 Home Depot, Inc. (The)............................ 104,035,781
1,675,000 McDonald's Corporation............................ 115,575,000
*640,000 Staples, Inc...................................... 18,520,000
3,000,000 Wal-Mart Stores, Inc.............................. 182,250,000
450,000 Walgreen Co....................................... 18,590,625
--------------
571,018,781
--------------
SOFTWARE & SERVICES -- 6.5%
*300,000 America Online, Inc............................... 31,800,000
*915,500 Automatic Data Processing, Inc.................... 66,717,062
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-4
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- (CONTINUED)
800,000 Computer Sciences Corporation..................... $ 51,200,000
1,400,000 First Data Corporation............................ 46,637,500
*1,600,000 Microsoft Corporation............................. 173,400,000
*650,000 PeopleSoft, Inc................................... 30,550,000
--------------
400,304,562
--------------
TRANSPORTATION -- 1.8%
2,250,000 Southwest Airlines Co............................. 66,656,250
1,050,000 Union Pacific Corp................................ 46,331,250
--------------
112,987,500
--------------
UTILITIES -- 5.9%
300,000 Ameritech Corporation............................. 13,462,500
2,000,000 Bell Atlantic Corporation......................... 91,250,000
600,000 Duke Energy Corporation........................... 35,550,000
500,000 MCI Communications Corporation.................... 29,062,500
3,000,000 SBC Communications, Inc........................... 120,000,000
*1,500,000 WorldCom, Inc..................................... 72,656,250
--------------
361,981,250
--------------
Total common stocks............................... $5,792,297,815
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<C> <S> <C>
SHORT TERM SECURITIES -- 5.8%
REPURCHASE AGREEMENT
$358,629,000 Interest in $1,111,215,000 joint repurchase
agreement with State Street Bank dated 06/30/98
at 5.80%, to be repurchased at $358,686,779 on
07/01/98; (Collateralized by $421,318,000 U.S.
Treasury Notes 5.75%-7.825% due
05/15/99-11/15/04, $563,474,000 U.S. Treasury
Bonds 8.00%-11.125% due 02/15/15-08/15/25,
121,000,000 U.S. Treasury Strips (principal) 0%
due 08/15/04-08/15/07 and 5,423,000 U.S.
Treasury Bills 0% due 08/13/98)................. $ 358,629,000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
---------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $3,565,285,159).............. 93.8% $ 5,792,297,815
Total short-term securities (cost $358,629,000)........ 5.8 358,629,000
------ ---------------
Total investment in securities
(total cost $3,923,914,159).......................... 99.6 6,150,926,815
Excess of cash, receivables and other assets over
liabilities.......................................... 0.4 24,049,188
------ ---------------
Net assets............................................. 100.0% $ 6,174,976,003
------ ---------------
------ ---------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 2,000,000,000 shares
authorized; 1,029,069,147 shares outstanding................. $ 102,906,915
Capital surplus................................................ 3,564,367,242
Accumulated undistributed net investment income................ 24,792,296
Accumulated undistributed net realized gain on investments.....
255,896,894
Unrealized appreciation of investments......................... 2,227,012,656
---------------
Net assets..................................................... $ 6,174,976,003
---------------
---------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($6,172,891,347 DIVIDED BY
1,027,075,607 shares outstanding).................... $6.01
-----
-----
Class IB
Net asset value per share ($2,084,656 DIVIDED BY
1,993,540 shares outstanding)........................ $1.05
-----
-----
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-5
<PAGE>
HARTFORD MONEY MARKET HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
COMMERCIAL PAPER -- 63.5%
Allergan Inc.
$10,000,000 5.56% due 08/04/98................................... $ 9,947,488
Allergan Inc.
10,000,000 5.55% due 07/28/98................................... 9,958,375
American Home Products
10,000,000 5.48% due 07/14/98................................... 9,980,211
Aristar, Inc.
10,000,000 5.60% due 07/10/98................................... 9,986,000
Associates Corp. of North America
10,000,000 5.49% due 08/24/98................................... 9,917,650
Bankers Trust New York
10,000,000 5.55% due 10/26/98................................... 9,819,625
Bankers Trust New York
10,000,000 5.5% due 09/28/98.................................... 9,864,027
Countrywide Home Loans
10,000,000 5.54% due 09/01/98................................... 9,904,675
Countrywide Home Loans
10,000,000 5.54% due 07/21/98................................... 9,969,222
Daimler Benz N.A.
10,000,000 5.48% due 07/13/98................................... 9,981,733
Daimler Benz N.A.
10,000,000 5.52% due 08/24/98................................... 9,917,200
Eaton Corp.
10,000,000 5.49% due 01/12/98................................... 9,795,650
Eaton Corp.
10,000,000 5.49% due 11/03/98................................... 9,809,201
Finova Capital Corp.
10,000,000 5.53% due 09/08/98................................... 9,894,008
Finova Capital Corp.
10,000,000 5.55% due 07/09/98................................... 9,987,666
Ford Motor Credit
15,000,000 5.48% due 07/27/98................................... 14,940,633
General Electric Capital
10,000,000 5.46% due 09/09/98................................... 9,893,833
General Signal Corp.
9,750,000 5.60% due 07/21/98................................... 9,719,666
GTE Corporation
10,000,000 5.55% due 07/07/98................................... 9,990,750
J.P. Morgan & Co.
5,000,000 5.50% due 09/14/98................................... 4,942,708
J.P. Morgan & Co.
15,000,000 5.50% due 10/19/98................................... 14,747,916
Monsanto Co.
10,000,000 5.50% due 10/26/98................................... 9,821,250
Morgan Stanley
10,000,000 5.50% due 08/31/98................................... 9,906,805
National Rural Utilities
10,000,000 5.50% due 09/14/98................................... 9,885,416
National Rural Utilities
10,000,000 5.51% due 08/05/98................................... 9,946,430
Nationwide Building Society
10,000,000 5.51% due 08/17/98................................... 9,928,063
Nationwide Building Society
10,000,000 5.50% due 10/13/98................................... 9,841,111
Nordbanken North America
10,000,000 5.50% due 10/05/98................................... 9,853,333
Procter & Gamble Co.
10,000,000 5.50% due 09/14/98................................... 9,885,416
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
Salomon Smith Barney, Inc.
$10,000,000 5.51% due 08/31/98................................... $ 9,906,658
Salomon Smith Barney, Inc.
10,000,000 5.51% due 08/03/98................................... 9,949,491
Sherwin-Williams Co.
5,000,000 5.51% due 08/10/98................................... 4,969,388
Sherwin-Williams Co.
4,200,000 5.55% due 09/22/98................................... 4,146,257
Southland Corp.
4,000,000 5.53% due 08/11/98................................... 3,974,807
Southland Corp.
1,298,000 5.49% due 09/09/98................................... 1,284,143
Southland Corp.
9,727,000 5.49% due 09/08/98................................... 9,624,647
Southland Corp.
5,000,000 5.54% due 08/11/98................................... 4,968,452
Spintab
10,000,000 5.56% due 01/18/98................................... 9,783,777
Svenska Handelsbanken, Inc.
10,000,000 5.44% due 09/22/98................................... 9,874,577
Svenska Handelsbanken, Inc.
10,000,000 5.43% due 09/21/98................................... 9,876,316
Westpac Capital Corp.
10,000,000 5.51% due 08/24/98................................... 9,917,425
Westpac Capital Corp.
10,000,000 5.50% due 08/17/98................................... 9,928,194
Wood Street Funding Corp.
10,000,000 5.50% due 07/09/98................................... 9,987,777
Zeneca Inc.
10,000,000 5.48% due 07/15/98................................... 9,978,688
-------------
Total commercial paper................................. $ 410,206,658
-------------
-------------
CORPORATE NOTES -- 30.5%
Bear Stearns Companies, Inc.
15,000,000 5.67% due 10/15/98................................... $ 15,000,000
Caterpillar Financial Services
10,000,000 6.58% due 10/19/98................................... 10,007,908
First USA Bank
4,250,000 5.89% due 10/22/98................................... 4,255,257
First USA Bank
15,000,000 5.83% due 10/09/98................................... 15,014,486
General Motors Acceptance Corp.
5,000,000 6.06% due 08/03/98................................... 5,000,985
Goldman Sachs Group
20,000,000 5.63% due 03/26/99................................... 20,000,000
Honda Motor Corp Mtn
20,000,000 5.62% due 04/08/99................................... 19,996,448
John Deere
20,000,000 5.49% due 02/09/99................................... 19,992,668
Lehman Brothers Holdings, Inc.
4,000,000 8.87% due 11/01/99................................... 4,035,948
Lehman Brothers Holdings, Inc.
15,250,000 5.92% due 01/13/99................................... 15,250,000
Merrill Lynch & Co., Inc.
20,000,000 5.68% due 07/20/99................................... 20,000,000
Morgan Stanley Group, Inc.
5,000,000 5.62% due 02/10/99................................... 5,002,800
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-6
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
CORPORATE NOTES -- (CONTINUED)
Morgan Stanley Group, Inc.
$ 5,000,000 5.66% due 02/28/98................................... $ 5,002,766
Triangle Funding Ltd.
19,250,000 5.75% due 01/15/98................................... 19,250,000
USL Capital Corporation
9,250,000 5.67% due 04/19/99................................... 9,265,882
Wells Fargo
10,000,000 5.82% due 07/01/98................................... 10,000,000
-------------
Total corporate notes.................................. $ 197,075,148
-------------
-------------
REPURCHASE AGREEMENT -- 4.1%
$26,155,000 Interest in $131,291,000 joint repurchase agreement
with State Street Bank dated 06/30/98 at 5.90%, to be
repurchased at $26,159,287 on 07/01/98;
(collateralized by $131,291,000 U.S. Treasury Bonds
6.5% due 11/15/26)................................... $ 26,155,000
-------------
-------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
---------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total commercial paper (cost $410,206,658)............. 63.5% $ 410,206,658
Total corporate notes (cost $197,075,148).............. 30.5 197,075,148
Total repurchase agreement (cost $26,155,000).......... 4.1 26,155,000
------ ---------------
Total investment in securities (total cost
$633,436,806)*....................................... 98.1 633,436,806
Excess of cash, receivables and other assets over
liabilities.......................................... 1.9 12,114,521
------ ---------------
Net assets applicable to $1.00 per share based on
645,551,327 shares outstanding....................... 100.0% $ 645,551,327
------ ---------------
------ ---------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 1,300,000,000 shares
authorized; 645,551,327 shares outstanding................... $ 64,555,133
Paid in surplus................................................ 580,996,194
---------------
Net assets..................................................... $ 645,551,327
---------------
---------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Shares of beneficial interest outstanding, $0.10 par
value (net assets $645,163,373)...................... 645,163,373
Net asset value........................................ $1.00
----
----
Class IB
Shares of beneficial interest outstanding, $0.10 par
value (net assets $387,954).......................... 387,954
Net asset value........................................ $1.00
----
----
</TABLE>
* Aggregate cost for federal income tax purposes.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-7
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
-------------- ---------------
<C> <S> <C>
COMMON STOCKS -- 62.2%
COMMUNICATIONS EQUIPMENT -- 2.7%
*240,000 Ciena Corporation................................. $ 16,710,000
*1,432,500 Cisco Systems, Inc................................ 131,879,531
1,000,000 Ericsson (L.M.) Telephone ADR..................... 28,625,000
1,070,000 Lucent Technologies, Inc.......................... 89,010,625
---------------
266,225,156
---------------
COMPUTERS & OFFICE
EQUIPMENT -- 3.5%
1,050,000 Compaq Computer Corporation....................... 29,793,750
*1,898,000 EMC Corp.......................................... 85,054,125
920,000 International Business Machines Corp.............. 105,627,500
1,360,000 Xerox Corporation................................. 138,210,000
---------------
358,685,375
---------------
CONSUMER NON-DURABLES -- 3.5%
625,000 Colgate-Palmolive Company......................... 55,000,000
550,000 Estee Lauder Companies Class A.................... 38,328,125
1,400,000 Gillette Company (The)............................ 79,362,500
1,450,000 Kimberly-Clark Corporation........................ 66,518,750
1,360,000 Proctor & Gamble Company (The).................... 123,845,000
---------------
363,054,375
---------------
CONSUMER SERVICES -- 1.2%
*561,821 Autotote Corp. (Unregistered Shares).............. 969,141
650,000 Eastman Kodak Company............................. 47,490,625
*2,350,000 Mirage Resorts, Inc............................... 50,084,375
730,700 ServiceMaster Company (The)....................... 27,812,268
---------------
126,356,409
---------------
ELECTRONICS -- 4.4%
*575,000 Altera Corporation................................ 16,998,437
*1,165,000 Analog Devices, Inc............................... 28,615,312
*400,000 Applied Materials, Inc............................ 11,800,000
3,250,000 General Electric Company.......................... 295,750,000
1,350,000 Intel Corporation................................. 100,068,750
---------------
453,232,499
---------------
ENERGY & SERVICES -- 2.9%
650,000 Chevron Corporation............................... 53,990,625
800,000 Exxon Corporation................................. 57,050,000
1,800,000 Royal Dutch Petroleum Co.......................... 98,662,500
1,270,000 Schlumberger Ltd. N.V............................. 86,756,875
---------------
296,460,000
---------------
FINANCIAL SERVICES -- 12.9%
1,110,000 Ace Ltd........................................... 43,290,000
1,100,000 American Express Co............................... 125,400,000
772,500 American International Group, Inc................. 112,785,000
1,130,000 Associates First Capital Corporation.............. 86,868,750
800,000 BankAmerica Corporation........................... 69,150,000
875,000 Citicorp.......................................... 130,593,750
300,000 Federal National Mortgage Association............. 18,225,000
1,100,000 First Union Corporation........................... 64,075,000
2,145,000 Marsh & McLennan Companies, Inc................... 129,638,437
42,800 Mellon Bank Corporation........................... 2,979,950
1,850,000 Merrill Lynch & Co., Inc.......................... 170,662,500
450,000 NationsBank Corporation........................... 34,425,000
1,350,000 State Street Corp................................. 93,825,000
2,850,000 Travelers Group, Inc.............................. 172,781,250
1,545,000 U.S. Bancorp...................................... 66,435,000
---------------
1,321,134,637
---------------
<CAPTION>
MARKET
SHARES VALUE
-------------- ---------------
<C> <S> <C>
FOOD, BEVERAGE & TOBACCO -- 2.1%
1,150,000 Coca-Cola Company (The) $ 98,325,000
700,000 Nabisco Holdings Corporation...................... 25,243,750
1,100,000 PepsiCo, Inc...................................... 45,306,250
550,000 Unilever NV-New York Shares....................... 43,415,625
---------------
212,290,625
---------------
HEALTH CARE -- 9.2%
2,600,000 Abbott Laboratories............................... 106,275,000
2,550,000 American Home Products Corporation and
Subsidiaries.................................... 131,962,500
2,800,000 Columbia/HCA Healthcare Corporation............... 81,550,000
1,370,000 Johnson & Johnson................................. 101,037,500
1,000,000 Merck & Co., Inc.................................. 133,750,000
1,000,000 Pfizer, Inc....................................... 108,687,500
2,100,000 Pharmacia & Upjohn, Inc........................... 96,862,500
1,125,000 Service Corporation International................. 48,234,375
700,000 SmithKline Beecham PLC ADR........................ 42,350,000
895,000 Tenet Healthcare Corporation...................... 27,968,750
975,000 Warner-Lambert Company............................ 67,640,625
---------------
946,318,750
---------------
INDUSTRIAL MATERIALS -- 0.1%
400,000 Santa Fe International Corporation................ 12,100,000
---------------
MANUFACTURING -- 0.5%
850,000 Perkin-Elmer Corporation (The).................... 52,859,375
---------------
MEDIA & SERVICES -- 3.4%
*500,000 Airtouch Communications, Inc...................... 29,218,750
*820,000 CBS Corporation................................... 26,035,000
*466,300 Clear Channel Communications, Inc................. 50,884,987
2,479,000 Gannett Co., Inc.................................. 176,163,937
625,000 Walt Disney Company (The)......................... 65,664,062
---------------
347,966,736
---------------
REAL ESTATE -- 0.1%
*6,150 Security Capital Group, Incorporated.............. 8,179,500
---------------
RETAIL -- 6.4%
2,519,600 CVS Corporation................................... 98,106,925
625,000 Gap, Inc.......................................... 38,515,625
1,447,500 Home Depot, Inc. (The)............................ 120,232,968
2,035,000 McDonald's Corporation............................ 140,415,000
*690,000 Staples, Inc...................................... 19,966,875
3,600,000 Wal-Mart Stores, Inc.............................. 218,700,000
500,000 Walgreen Co....................................... 20,656,250
---------------
656,593,643
---------------
SOFTWARE & SERVICES -- 4.5%
*300,000 America Online, Inc............................... 31,800,000
898,200 Automatic Data Processing, Inc.................... 65,456,325
*1,000,000 Computer Sciences Corporation..................... 64,000,000
1,650,000 First Data Corporation............................ 54,965,625
*1,900,000 Microsoft Corporation............................. 205,912,500
*750,000 PeopleSoft, Inc................................... 35,250,000
---------------
457,384,450
---------------
TRANSPORTATION -- 1.3%
2,775,000 Southwest Airlines Co............................. 82,209,375
1,230,000 Union Pacific Corp................................ 54,273,750
---------------
136,483,125
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-8
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
-------------- ---------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- 3.5%
300,000 Ameritech Corporation............................. $ 13,462,500
1,500,000 Bell Atlantic Corporation......................... 68,437,500
600,000 Duke Energy Corporation........................... 35,550,000
500,000 MCI Communications Corporation.................... 29,062,500
3,700,000 SBC Communications, Inc........................... 148,000,000
1,300,000 WorldCom, Inc..................................... 62,968,750
---------------
357,481,250
---------------
Total common stocks............................... $ 6,372,805,905
---------------
---------------
ASSET-BACKED SECURITIES -- 0.3%
Aesop AU 98-1
30,000,000 6.14% due 05/20/06.............................. $ 30,018,750
---------------
---------------
<CAPTION>
PRINCIPAL
AMOUNT
--------------
<C> <S> <C>
CORPORATE BONDS & NOTES -- 5.9%
FINANCIAL SERVICES -- 3.4%
Amerus Life Holdings
$ 17,905,000 6.95% due 06/15/05.............................. $ 17,878,411
Amvescap Plc
21,670,000 6.60% due 06/15/05.............................. 21,899,420
Associate Corp. N.A.
15,000,000 6.50% due 10/15/02.............................. 15,240,075
Bank of Boston Corporation
10,000,000 6.63% due 02/01/04.............................. 10,177,600
Banponce Corp.
14,825,000 6.75% due 12/15/05.............................. 15,205,424
Bayerische Landesbank NY
15,000,000 5.63% due 02/26/01.............................. 14,886,150
CIT Group Holdings
20,000,000 6.75% due 05/14/01.............................. 20,412,700
Chase Manhattan Corp.
10,000,000 8.50% due 02/15/02.............................. 10,785,640
Citicorp
20,000,000 5.63% due 02/15/01.............................. 19,785,460
Credit National Euro
24,000,000 7.00% due 11/14/05.............................. 24,480,000
Fairfax Financial Holdings
10,000,000 7.75% due 12/15/03.............................. 10,513,950
Finova Capital Corporation
18,000,000 6.39% due 10/08/02.............................. 18,190,602
First Interstate Bank
12,000,000 9.00% due 11/15/04.............................. 12,473,028
First Union Corp.
25,000,000 6.40% due 04/01/08.............................. 25,158,550
Fleet Financial Group
20,000,000 6.88% due 01/15/28.............................. 20,525,400
Heller Financial
20,000,000 6.38% due 11/10/00.............................. 20,097,420
Home Savings America
15,000,000 6.00% due 11/01/00.............................. 15,006,330
Lumbermens Mutual Casualty, Inc.
10,000,000 9.15% due 07/01/26.............................. 12,014,210
NationsBank Corp.
20,000,000 7.80% due 09/15/16.............................. 22,645,100
Travelers Group, Inc.
10,000,000 6.25% due 12/01/05.............................. 10,099,200
Travelers/Aetna P&C, Inc.
10,000,000 6.75% due 04/15/01.............................. 10,202,570
---------------
347,677,240
---------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------- ---------------
<C> <S> <C>
CORPORATE BONDS & NOTES -- (CONTINUED)
INDUSTRIAL MATERIALS -- 1.8%
Boise Cascade Office
$ 25,000,000 7.05% due 05/15/05.............................. $ 25,203,825
Computer Associates International
25,000,000 6.50% due 04/15/08.............................. 25,109,800
E.W. Scripps Company
19,420,000 6.38% due 10/15/02.............................. 19,600,062
Honeywell Inc.
13,135,000 6.60% due 04/15/01.............................. 13,329,200
Husky Oil Ltd.
15,000,000 6.88% due 11/15/03.............................. 15,052,800
ICI Wilmington
20,000,000 6.95% due 09/15/04.............................. 20,813,360
Postal Square LP
7,300,764 8.95% due 06/15/22.............................. 9,450,619
Praxair Inc.
25,000,000 6.15% due 04/15/03.............................. 24,974,000
Williams Companies, Inc.
20,000,000 6.50% due 11/15/02.............................. 20,237,860
Zeneca Wilmington
10,000,000 6.30% due 06/15/03.............................. 10,090,090
---------------
183,861,616
---------------
REAL ESTATE -- 0.2%
Liberty Property Trust (REIT)
20,000,000 7.25% due 08/15/07.............................. 20,346,980
---------------
UTILITIES -- 0.5%
Hydro Quebec
15,000,000 7.37% due 02/01/03.............................. 15,737,250
Pacific Gas & Electric
11,000,000 7.88% due 03/01/02.............................. 11,658,581
Southern California Gas Co.
10,000,000 5.75% due 11/15/03.............................. 9,901,760
US West Capital Funding Inc.
15,710,000 6.88% due 07/15/28.............................. 15,758,701
---------------
53,056,292
---------------
Total corporate bonds & notes..................... $ 604,942,128
---------------
---------------
FOREIGN GOVERNMENT BONDS -- 0.2%
City Of Naples, Italy
$ 17,000,000 7.52% due 07/15/06.............................. $ 18,025,000
---------------
---------------
MORTGAGE-BACKED SECURITIES -- 0.7%
ASC 97-D4 A-1D
$ 18,000,000 7.49% due 04/14/29.............................. $ 19,582,560
Chase Commercial Mortgage 1997-A2
25,000,000 7.37% due 02/19/07.............................. 26,619,750
Newcourt EQ 97-1 A4
28,500,000 6.19% due 06/20/05.............................. 28,732,560
---------------
Total mortgage-backed securities.................. $ 74,934,870
---------------
---------------
MUNICIPAL BONDS -- 0.3%
Miami Beach, Florida
$ 7,000,000 8.80% due 12/01/15.............................. $ 7,883,519
Mount Sinai School of Medicine NY
20,000,000 6.00% due 07/01/03.............................. 20,119,860
---------------
Total municipal bonds............................. $ 28,003,379
---------------
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-9
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------- ---------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 27.4%
U.S. TREASURY BONDS -- 6.3%
$3,683,000,000 6.25% due 08/15/23.............................. $ 393,875,184
214,000,000 7.25% due 05/15/16.............................. 250,781,250
---------------
644,656,434
---------------
U.S. TREASURY NOTES -- 18.2%
584,000,000 5.75% due 10/31/00 - 08/15/03................... 589,190,075
200,000,000 6.25% due 05/31/00.............................. 202,625,000
550,000,000 6.50% due 08/15/05 - 10/15/06................... 582,562,650
207,000,000 7.25% due 05/15/04 - 08/15/04................... 224,962,866
213,000,000 7.50% due 11/15/07 - 02/15/05................... 228,227,294
34,000,000 7.75% due 12/31/99.............................. 35,062,500
---------------
1,862,630,385
---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 2.9%
49,640,684 6.00% due 06/15/24 - 05/15/28................... 48,477,120
148,389,652 6.50% due 03/15/26 - 06/15/28................... 148,018,677
99,112,410 7.00% due 11/15/23 - 11/15/24................... 100,938,336
2,849,002 9.00% due 06/20/16 - 07/20/16................... 3,069,201
---------------
300,503,334
---------------
Total U.S. treasuries & federal agencies.......... $ 2,807,790,153
---------------
---------------
SHORT-TERM SECURITIES -- 2.3%
REPURCHASE AGREEMENT
$ 235,723,000 Interest in $1,111,215,000 joint repurchase
agreement with State Street Bank dated 06/30/98
at 5.80%, to be repurchased at $235,760,978 on
07/01/98; (collateralized by $421,318,000 U.S.
Treasury Notes 5.75%-7.825% due
05/15/99-11/15/04, 563,474,000 U.S. Treasury
Bonds 8.00%-11.125% due 02/15/15-08/15/25,
121,000,000 U.S. Treasury Strips (principal) 0%
due 08/15/04-8/15/07 and 5,423,000 U.S. Treasury
Bills 0% due 08/13/98).......................... $ 235,723,000
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
---------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $3,654,306,296)............. 62.2% $ 6,372,805,905
Total asset-backed securities (cost $29,978,508)...... 0.3 30,018,750
Total corporate bonds & notes (cost $592,149,221)..... 5.9 604,942,128
Total foreign government bonds (cost $17,000,000)..... 0.2 18,025,100
Total mortgage-backed securities (cost $72,776,702)... 0.7 74,934,870
Total municipal bonds (cost $27,012,672).............. 0.3 28,003,379
Total U.S. treasuries & federal agencies (cost
$2,686,465,626)..................................... 27.4 2,807,790,153
Total short-term securities (cost $235,723,000)....... 2.3 235,723,000
------ ---------------
Total investment in securities
(total cost $7,315,414,025)......................... 99.3 10,172,243,285
Excess of cash, receivables and other assets over
liabilities ........................................ 0.7 71,612,363
------ ---------------
Net assets............................................ 100.0% $10,243,855,648
------ ---------------
------ ---------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 6,000,000,000 shares
authorized; 3,637,653,871 shares outstanding................ $ 363,765,387
Capital surplus............................................... 6,551,416,345
Accumulated undistributed net investment income............... 108,394,386
Accumulated undistributed net realized gain on investments....
363,450,270
Unrealized appreciation of investments........................ 2,856,829,260
---------------
Net assets.................................................... $10,243,855,648
---------------
---------------
Class IA
Net asset value per share ($10,237,519,510 DIVIDED BY
3,631,548,444 shares outstanding).................... $2.82
-----
-----
Class IB
Net asset value per share ($6,336,138 DIVIDED BY
6,105,427 shares outstanding)........................ $1.04
-----
-----
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-10
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- --------------
<C> <S> <C>
COMMON STOCKS -- 92.8%
AEROSPACE & DEFENSE -- 3.8%
1,550,000 Boeing Company (The).............................. $ 69,071,875
*1,652,900 Loral Space & Communications Ltd.................. 46,694,425
369,500 Northrop Grumman Corporation...................... 38,104,687
1,050,000 Precision Castparts Corporation................... 56,043,750
--------------
209,914,737
--------------
BUSINESS SERVICES -- 1.3%
298,915 Aztec Technology Partners......................... 2,279,228
*934,900 Ionics, Inc....................................... 34,474,437
970,000 Manpower, Inc..................................... 27,826,875
149,458 Navigant International, Inc....................... 1,270,389
*373,644 U.S. Office Products Company...................... 7,286,058
199,276 Workflow Management, Inc.......................... 1,606,665
--------------
74,743,652
--------------
COMMUNICATIONS EQUIPMENT -- 5.1%
*1,075,000 3Com Corporation.................................. 32,989,062
*694,200 Cisco Systems, Inc................................ 63,909,787
1,318,000 ECI Telecommunications............................ 49,919,250
*373,300 Elsag Bailey Process Auto NV...................... 8,982,531
1,384,050 General Cable Corporation......................... 39,964,443
712,200 Lucent Technologies, Inc.......................... 59,246,137
*1,000,000 Oak Industries, Inc............................... 35,375,000
--------------
290,386,210
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 4.0%
*3,400,000 EMC Corporation................................... 152,362,500
*1,000,000 Komag Inc......................................... 5,343,750
*687,200 Seagate Technology, Inc........................... 16,363,950
*1,331,250 Symbol Technologies, Inc.......................... 50,254,687
--------------
224,324,887
--------------
CONSUMER NON-DURABLES -- 1.3%
1,000,000 Kimberly-Clark Corporation........................ 45,875,000
*1,335,200 Quiksilver Inc.................................... 27,019,300
--------------
72,894,300
--------------
CONSUMER SERVICES -- 2.3%
*749,800 American Skiing Corporation....................... 9,747,400
950,000 Berg Electronics Corp............................. 18,584,375
*986,250 Cheesecake Factory, Inc. (The).................... 22,313,906
89,800 Harman International Industries, Inc.............. 3,457,300
1,600,000 International Game Technology..................... 38,800,000
*1,817,000 Mirage Resorts, Inc............................... 38,724,812
--------------
131,627,793
--------------
ELECTRONICS -- 6.5%
*660,000 Altera Corporation................................ 19,511,250
*883,333 Analog Devices, Inc............................... 21,696,866
*800,000 Credence Systems Corporation...................... 15,200,000
*426,900 Lattice Semiconductor Corporation................. 12,126,628
1,250,001 Molex, Inc........................................ 29,218,779
1,400,000 Philips Electronics N.V. NY Shares................ 119,000,000
120,000 SCI Systems, Inc.................................. 4,515,000
1,100,000 Silicon Valley Group, Inc......................... 17,668,750
*1,739,400 Solectron Corporation............................. 73,163,512
<CAPTION>
MARKET
SHARES VALUE
----------- --------------
<C> <S> <C>
ELECTRONICS -- (CONTINUED)
800,001 Thomas & Betts Corporation........................ $ 39,400,049
*1,003,206 Vishay Intertechnology, Inc....................... 17,995,007
--------------
369,495,841
--------------
ENERGY & SERVICES -- 5.1%
360,600 Ashland, Inc...................................... 18,615,975
1,000,000 Eni ADS........................................... 65,000,000
*940,700 Input Output, Inc................................. 16,756,218
*755,100 J Ray McDermott SA................................ 31,336,650
920,200 Nordic American Tanker Shipping Ltd............... 13,860,512
700,000 Repsol SA......................................... 38,500,000
1,631,570 Transocean Offshore, Inc.......................... 72,604,865
1,110,000 YPF SA ADR........................................ 33,369,375
--------------
290,043,595
--------------
FINANCIAL SERVICES -- 18.4%
2,065,000 Ace Ltd........................................... 80,535,000
1,150,000 Aetna Life Insurance and Annuity Company.......... 87,543,750
1,349,300 Ambac Financial Group, Inc........................ 78,934,050
1,200,000 Banc One Corporation.............................. 66,975,000
1,200,000 BankBoston Corporation............................ 66,750,000
1,000,000 Bear Stearns Cos, Inc............................. 56,875,000
300,000 Citicorp.......................................... 44,775,000
850,000 Federal National Mortgage Association............. 51,637,500
*1,280,000 FIRSTPLUS Financial Group, Inc.................... 46,080,000
1,800,000 GreenPoint Financial Corp......................... 67,725,000
*377,500 Heller Financial, Inc............................. 11,325,000
*1,300,000 Imperial Credit Industries, Inc................... 30,550,000
761,200 Legg Mason, Inc................................... 43,816,575
1,050,000 Marsh & McLennan Companies, Inc................... 63,459,375
473,000 Merrill Lynch & Co., Inc.......................... 43,634,250
739,100 MMI Companies, Inc................................ 18,340,437
1,168,600 Morgan Stanley Dean Witter & Co................... 106,780,825
468,400 Providian Financial Corporation................... 36,798,675
1,050,000 Unibanco GDR...................................... 30,975,000
--------------
1,033,510,437
--------------
FOOD, BEVERAGE & TOBACCO -- 0.5%
1,378,000 Archer-Daniels-Midland Company.................... 26,698,759
--------------
FOREIGN SECURITIES -- 3.5%
154,000 Alcatel Alsthom................................... 31,355,125
*7,000,000 Billiton PLC...................................... 14,190,609
*1,445,000 Corporation Geo SA de CV-Class B.................. 7,749,135
1,900,000 Eisai Co., Ltd.................................... 25,874,551
1,000,000 Siemans AG........................................ 60,829,879
160,000 UBS AG............................................ 59,493,239
--------------
199,492,538
--------------
HEALTH CARE -- 13.1%
1,600,000 Abbott Laboratories............................... 65,400,000
*943,400 Biogen, Inc....................................... 46,226,600
*2,200,000 Columbia/HCA Healthcare Corporation............... 64,075,000
1,169,800 Depuy, Inc........................................ 33,046,850
*1,700,000 Genzyme Corporation............................... 43,456,250
*500,000 Humana Inc........................................ 15,593,750
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-11
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- --------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
1,725,000 ICN Pharmaceuticals, Inc.......................... $ 78,810,937
*731,400 IDX Systems Corporation........................... 33,690,112
*1,135,000 Magellan Health Services, Inc..................... 28,800,625
*2,370,000 Medpartners....................................... 18,960,000
2,600,000 Pharmacia & Upjohn, Inc........................... 119,925,000
1,650,000 Rhone-Poulenc SA.................................. 92,709,375
225,600 Vencor, Inc....................................... 1,635,600
*750,000 Ventas, Inc....................................... 10,359,375
*1,159,600 Wellpoint Health Networks, Inc.................... 85,810,400
--------------
738,499,874
--------------
INDUSTRIAL MATERIALS -- 1.9%
1,221,300 IMC Global, Inc................................... 36,791,662
286,600 Owens Corning..................................... 11,696,862
1,150,000 Titanium Metals Corporation....................... 25,371,875
*1,200,000 UCAR International, Inc........................... 35,025,000
--------------
108,885,399
--------------
MANUFACTURING -- 0.8%
1,170,000 Chicago Bridge & Iron Company NV.................. 18,135,000
705,000 Cognex Corporation................................ 13,042,500
262,713 Perkin-Elmer Corporation (The).................... 16,337,464
--------------
47,514,964
--------------
MEDIA & SERVICES -- 2.0%
*1,400,000 ADC Telecommunications, Inc....................... 51,143,750
*559,600 APT Satellite Holdings ADR........................ 4,931,475
*743,100 Capstar Broadcasting Corp. Class A................ 18,670,387
857,000 News Corporation Ltd. Sponsored ADR............... 24,210,250
*600,000 Omnipoint Corporation............................. 13,762,500
--------------
112,718,362
--------------
REAL ESTATE -- 1.8%
2,000,000 Beacon Capital Corp. (Reit)**..................... 40,000,000
*350,400 Boston Properties, Inc............................ 12,088,800
*261,500 Security Capital Group Incorporated - Class B..... 6,962,437
*900,000 Starwood Hotels & Resorts......................... 43,481,250
--------------
102,532,487
--------------
RETAIL -- 3.9%
1,600,000 Cendant Corporation............................... 33,400,000
*2,120,000 CompUSA, Inc...................................... 38,292,500
*1,150,000 Consolidated Stores Corporation, Inc.............. 41,687,500
1,200,000 Gap, Inc.......................................... 73,950,000
375,000 Home Depot, Inc. (The)............................ 31,148,437
--------------
218,478,437
--------------
SOFTWARE & SERVICES -- 8.1%
*800,000 America Online, Inc............................... 84,800,000
*825,000 Ceridian Corporation.............................. 48,468,750
*517,800 Cognos Corporation................................ 13,794,515
*1,350,000 Compuware Corporation............................. 69,018,750
<CAPTION>
MARKET
SHARES VALUE
----------- --------------
<C> <S> <C>
SOFTWARE & SERVICES -- (CONTINUED)
1,000,000 Electronic Data Systems Corporation............... $ 40,000,000
1,240,218 First Data Corporation............................ 41,314,762
111,800 Intuit, Inc....................................... 6,847,750
*1,500,000 Learning Company, Inc. (The)...................... 44,437,500
*300,000 Microsoft Corporation............................. 32,512,500
*550,000 PeopleSoft, Inc................................... 25,850,000
*562,200 Policy Management Systems Corporation............. 22,066,350
*2,000,000 Rational Software Corporation..................... 30,500,000
--------------
459,610,877
--------------
TRANSPORTATION -- 2.2%
*852,600 AMR Corporation................................... 70,978,950
1,000,000 Canadian Pacific Ltd.............................. 28,375,000
1,423,750 Werner Enterprises, Inc........................... 27,140,234
--------------
126,494,184
--------------
UTILITIES -- 5.1%
*1,886,500 Calpine Corporation............................... 38,083,718
*500,000 Companie Generale de Geophysique SA............... 14,687,500
1,400,000 Empresa Nacional de Electricidad SA............... 19,950,000
1,882,000 Endesa S.A........................................ 40,698,250
1,011,600 MCI Communications Corporation.................... 58,799,250
*2,400,000 WorldCom, Inc..................................... 116,250,000
--------------
288,468,718
--------------
WASTE MANAGEMENT -- 2.1%
*1,781,000 Republic Industries, Inc.......................... 44,525,000
2,100,000 Waste Management, Inc............................. 73,500,000
--------------
118,025,000
--------------
Total common stocks............................... $5,204,361,042
--------------
--------------
PREFERRED STOCKS -- 1.5%
CONSUMER SERVICES -- 0.1%
*1,094,544 SGW Holdings Corporation***....................... $ 6,911,717
--------------
FINANCIAL SERVICES -- 1.0%
1,280,000 Union Pacific Cap Trust........................... 58,720,000
--------------
MANUFACTURING -- 0.4%
1,228,000 Cooper Industries, Inc............................ 21,643,500
--------------
Total preferred stocks............................ $ 87,275,217
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
CORPORATE NOTES -- 0.3%
FOOD, BEVERAGE & TOBACCO
Unisys Corp.**
$15,000,000 12.00% due 04/15/03............................. $ 16,912,500
--------------
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-12
<PAGE>
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT --------------
-----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 4.7%
REPURCHASE AGREEMENT
$262,420,000 Interest in $1,111,215,000 joint repurchase
agreement with State Street Bank dated 06/30/98
at 5.80%, to be repurchased at $262,462,279 on
07/01/98; (collateralized by $421,318,000 U.S.
Treasury Notes 5.75%-7.825% due
05/15/99-11/15/04, 563,474,000 U.S. Treasury
Bonds 8.00%-11.125% due 02/15/15-08/15/25,
121,000,000 U.S. Treasury Strips (principal) 0%
due 08/15/04-08/15/07 and 5,423,000 U.S.
Treasury Bills 0% due 08/13/98)................. $ 262,420,000
--------------
--------------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $3,908,907,022)............. 92.8 % $ 5,244,361,042
Total preferred stocks (cost $92,022,168)............. 1.5 87,275,217
Total corporate notes (cost $15,293,984).............. 0.3 16,912,500
Total short-term securities (cost $262,420,000)....... 4.7 262,420,000
------ ---------------
Total investment in securities
(total cost $4,278,643,174)......................... 99.3 5,610,968,759
Excess of cash, receivables and other assets over
liabilities......................................... 0.7 37,329,106
------ ---------------
Net assets............................................ 100.0 % $ 5,648,297,865
------ ---------------
------ ---------------
MARKET
VALUE
---------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 2,000,000,000 shares
authorized; 1,220,826,223 shares outstanding................ $ 122,082,622
Capital surplus............................................... 4,001,959,789
Accumulated undistributed net investment income............... 17,629,655
Accumulated undistributed net realized gain on investments....
174,938,982
Unrealized appreciation of investments........................ 1,332,325,585
Unrealized depreciation on forward currency contracts......... (567,810)
Unrealized depreciation on translation on other assets and
liabilities in foreign currencies........................... (70,958)
---------------
Net assets.................................................... $5,648,297,865
---------------
---------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($5,646,451,781 DIVIDED BY
1.218,952,381 shares outstanding).................... $4.63
-----
-----
Class IB
Net asset value per share ($1,846,076 DIVIDED BY
1,873,842 shares outstanding)........................ $0.99
-----
-----
</TABLE>
* Non-income producing during period.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1998,
the market value of these securities amounted to $56,912,500 or 1% of net
assets.
*** Restricted security (See Note 2)
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 1998
<TABLE>
<CAPTION>
AGGREGATE DELIVERY UNREALIZED
DESCRIPTION TOTAL VALUE FACE VALUE DATE DEPRECIATION
--------------------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C>
Brazilian Real (Sell) $26,307,810 $25,740,000 08/19/98 $(567,810)
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-13
<PAGE>
HARTFORD MORTGAGE SECURITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 0.8%
Corestates Home Equity Trust,
Series 94-1, Class A
$ 2,625,126 6.65% due 05/15/09.............................. $ 2,657,677
--------------
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 21.9%
Asset Securitization Corporation
Series 1997-MD7, Class A1B
5,000,000 7.41% due 01/13/30.............................. $ 5,383,285
BankAmerica Manufactured Housing
5,000,000 6.31% due 10/10/10.............................. 5,046,450
Bear Stearns Mortgage Securities, Inc. Series
95-1, Class 1A
3,424,371 6.48% due 05/25/10.............................. 3,438,445
Chase Manhattan RV Owner Trust
3,000,000 6.32% due 02/15/08.............................. 3,023,160
Chase Mortgage Finance Corp. Series 93-C2, Class
2A-3
1,361,367 8.25% due 01/25/24.............................. 1,365,586
Countrywide Home Loans
4,143,160 7.50% due 04/25/27.............................. 4,196,014
Countrywide Home Loans
4,937,055 6.50% due 06/25/13.............................. 4,916,997
Countrywide Mortgage Backed Securities, Inc.,
Series 93-C, Class A1
1,500,000 6.28% due 01/15/03.............................. 1,503,046
DLJ Mortgage Acceptance Corporation Series 96-I,
Class B1
477,439 7.25% due 09/25/11.............................. 491,016
DLJ Mortgage Acceptance Corporation Series 96-I,
B2
159,146 7.25% due 09/25/11.............................. 162,080
GE Capital Mortgage Services, Inc. Series 94-21,
Class A
6,251,451 6.50% due 08/25/09.............................. 6,283,083
GE Capital Mortgage Services, Inc. Series 94-26,
Class A
6,040,006 6.98% due 07/25/09.............................. 6,120,639
GE Capital Mortgage Services, Inc. Series 96-1,
Class B2
563,741 6.75% due 02/25/11.............................. 562,731
GE Capital Mortgage Services, Inc. Series 96-1,
Class M
1,689,426 6.75% due 02/25/11.............................. 1,706,371
GE Capital Mortgage Services, Inc. Series 96-10,
Class B1
570,848 6.75% due 06/25/11.............................. 574,152
GE Capital Mortgage Services, Inc. Series 96-10,
Class B2
570,848 6.75% due 06/25/11.............................. 569,848
GE Capital Mortgage 98-7a
4,807,448 6.50% due 04/25/13.............................. 4,808,740
GGP 1997 C1 A1
1,000,000 6.54% due 01/15/04.............................. 1,019,062
GSMGT 97gl A2b
2,000,000 6.86% due 07/13/30.............................. 2,080,140
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS -- (CONTINUED)
Housing Securities, Inc.
Series 93-E, Class E15
$ 3,470,165 10.00% due 09/25/08............................. $ 3,672,683
Midland Realty Corp. 1996-c2 A1
779,434 7.02% due 01/25/29.............................. 802,520
Morgan Stanley Capital Ser 1997-c1
930,000 7.63% due 02/15/20 1,000,112
Nascor Series 1998-16 Cl Pt
4,250,000 8.50% due 05/31/13.............................. 4,244,687
PNC Mortgage Securities Corp. Series 96-2, Class
B1
576,525 6.60% due 02/25/11.............................. 576,588
PNC Mortgage Securities Corp. Series 96-2, Class
B2
192,175 6.60% due 02/25/11.............................. 194,030
PNC Mortgage Securities Corp. Series 96-2, Class
B3
307,480 6.60% due 02/25/11.............................. 305,278
Prudential Home Mortgage Securities Co. Series
93-H, Class 2B
4,438,181 6.76% due 09/28/08.............................. 4,466,985
Prudential Home Mortgage Securities Co. Series
96-3, Class B1
1,124,244 6.75% due 03/25/11.............................. 1,140,554
Prudential Home Mortgage Securities Co. Series
96-3, Class B2
561,672 6.75% due 03/25/11.............................. 565,019
Residential Funding Mortgage Sec I Series 95-S18,
Class M3
689,224 7.00% due 01/25/10.............................. 706,502
Residential Funding Mortgage Sec I Series 96-S11,
Class M3
262,046 7.00% due 04/25/11.............................. 268,551
Residential Funding Mortgage Sec I Series 96-S19,
Class M3
488,742 7.50% due 09/25/11.............................. 505,857
Residential Funding Mortgage Sec I Series 96-S5,
Class M3
538,309 6.75% due 02/25/11.............................. 546,769
--------------
Total collateralized mortgage obligations......... $ 72,246,980
--------------
--------------
CORPORATE NOTES -- 1.5%
ERP Operating LP
5,000,000 6.63% due 04/13/05.............................. $ 5,023,635
--------------
--------------
FEDERAL AGENCIES -- 67.9%
FEDERAL HOME LOAN
MORTGAGE ASSOCIATION -- 13.3%
2,257,390 10.00% due 09/01/05 - 11/01/20.................... $ 2,452,433
15,073,792 6.50% due 02/01/09 - 06/01/26..................... 15,098,171
8,526,940 7.00% due 12/01/10 - 03/01/26..................... 8,662,859
2,404,246 7.50% due 01/01/24 - 06/01/25..................... 2,466,222
4,277,018 8.00% due 02/01/13 - 11/01/24..................... 4,423,844
3,400,089 8.50% due 07/01/01 - 05/01/25..................... 3,531,544
3,191,026 9.00% due 10/15/01 - 10/01/06..................... 3,294,867
3,641,961 9.50% due 11/01/08................................ 3,810,219
--------------
43,740,159
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
FEDERAL AGENCIES -- (CONTINUED)
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 25.3%
$ 716,191 11.00% due 04/01/09............................... $ 801,382
1,000,113 6.00% due 05/01/13................................ 988,857
19,687,739 6.50% due 02/01/13 - 07/25/28..................... 19,716,785
29,340,700 7.00% due 05/01/09 - 07/25/28..................... 29,808,289
24,551,166 7.50% due 02/01/10 - 07/25/28..................... 25,220,280
1,960,895 8.00% due 04/01/22................................ 2,034,879
1,829,753 8.50% due 06/25/19 - 07/01/25..................... 1,908,698
2,629,427 9.00% due 05/01/21 - 09/01/21..................... 2,784,299
--------------
83,263,469
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 29.3%
114,144 12.00% due 05/15/15............................... 130,424
39,228,950 7.50% due 11/15/09 - 07/15/28..................... 40,336,512
1,709,362 10.00% due 11/15/09 - 05/15/13.................... 1,880,169
453,455 11.00% due 02/15/10 - 09/15/10.................... 506,563
35,430 11.25% due 01/15/01............................... 37,331
59,431 12.50% due 06/15/14 - 08/15/15.................... 69,309
25,668 13.00% due 11/15/14............................... 30,283
10,000,000 6.50% due 07/15/98................................ 9,974,930
17,804,595 7.00% due 01/15/24 - 07/15/28..................... 18,094,479
17,989,459 8.00% due 02/15/01 - 11/29/27..................... 18,660,932
2,269,344 8.50% due 06/15/17 - 02/15/25..................... 2,397,263
1,341,115 9.00% due 01/15/25 - 12/15/25..................... 1,437,997
2,852,959 9.50% due 10/15/09 - 11/15/09..................... 3,107,442
--------------
96,663,634
--------------
Total federal agencies............................ $ 223,667,262
--------------
--------------
SHORT-TERM SECURITIES -- 27.7%
COMMERCIAL PAPER -- 12.1%
American Express Credit
5,000,000 5.53% due 07/21/98.............................. $ 4,984,638
Associates Corporation of North America
5,000,000 5.53% due 07/14/98.............................. 4,990,015
Bell Atlantic Financial Services
5,000,000 5.53% due 07/21/98.............................. 4,984,638
Ford Motor Credit Corp.
5,000,000 5.51% due 07/14/98.............................. 4,990,051
General Motors Acceptance Corp.
5,000,000 5.51% due 07/21/98.............................. 4,984,694
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- (CONTINUED):
COMMERCIAL PAPER -- (CONTINUED)
Goldman Sachs Group, L.P. (The)
$ 5,000,000 5.52% due 07/20/98.............................. $ 4,985,433
Merrill Lynch & Co., Inc.
5,000,000 5.58% due 07/14/98.............................. 4,989,925
Salomon Smith Barney, Inc.
5,000,000 5.55% due 07/15/98.............................. 4,989,208
--------------
39,898,602
--------------
REPURCHASE AGREEMENT -- 15.6%
$51,220,000 Interest in $131,291,000 joint repurchase
agreement with State Street Bank dated 06/30/98
at 5.90% to be repurchased at $51,228,394 on
July 1, 1998; (Collateralized by $131,291,000
U.S. Treasury Bonds 6.5% due 11/15/26).......... $ 51,220,000
--------------
Total short-term securities....................... $ 91,118,602
--------------
--------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total asset-backed securities (cost $2,591,938).... 0.8 % $ 2,657,677
Total collateralized mortgage obligations
(cost $71,027,101)............................... 21.9 72,246,980
Total corporate notes (cost $5,000,000)............ 1.5 5,023,635
Total U.S. treasuries & Federal agencies (cost
$220,448,316).................................... 67.9 223,667,262
Total short-term securities (cost $91,118,602)..... 27.7 91,118,602
------ ---------------
Total investment in securities
(total cost $390,185,957)........................ 119.9 394,714,156
Excess of liabilities over cash, receivables and
other assets..................................... (19.9) (65,403,846)
------ ---------------
Net assets (applicable to $1.11 per share based on
295,977,969 shares outstanding).................. 100.0% $ 329,310,310
------ ---------------
------ ---------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 800,000,000
shares authorized; 295,977,969 shares outstanding........ $ 29,597,797
Capital surplus............................................ 293,734,134
Accumulated undistributed net investment income............ 9,741,147
Accumulated net realized loss on investments............... (8,329,063)
Unrealized appreciation of investments..................... 4,528,199
Unrealized appreciation on option contracts*............... 38,096
---------------
Net assets, applicable to shares outstanding............... $ 329,310,310
---------------
---------------
</TABLE>
* At June 30, 1998, the Fund had an open Interest Rate Swap Option with Morgan
Guarantee Trust Company. The Option had a notional value of $10,523,805 at June
30, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-15
<PAGE>
HARTFORD INDEX HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES MARKET
--------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- 98.5%
AEROSPACE & DEFENSE -- 1.8%
96,000 Allied Signal, Inc................................ $ 4,260,000
171,498 Boeing Company (The).............................. 7,642,379
21,400 General Dynamics Corp............................. 995,100
33,100 Lockheed Martin Corp.............................. 3,504,462
11,400 Northrop Grumman Corp............................. 1,175,625
57,423 Raytheon Co. Class B.............................. 3,395,134
34,200 Rockwell International Corp....................... 1,643,737
28,000 Textron, Inc...................................... 2,007,250
39,700 United Technologies Corp.......................... 3,672,250
--------------
28,295,937
--------------
BUSINESS SERVICES -- 0.4%
13,800 DeLuxe Corp....................................... 494,212
14,300 Fluor Corp........................................ 729,300
6,900 Foster Wheeler Corp............................... 147,918
22,900 Ikon Office Solutions............................. 333,481
15,000 Moore Corp. Ltd................................... 198,750
7,300 National Service Industries, Inc.................. 371,387
24,800 R.R. Donnelly & Sons Company...................... 1,134,600
10,200 SuperValu, Inc.................................... 452,625
67,800 Sysco Corp........................................ 1,481,125
16,900 W.W. Grainger, Inc................................ 841,831
--------------
6,185,229
--------------
COMMUNICATIONS EQUIPMENT -- 3.6%
*60,400 3Com Corp......................................... 1,853,525
15,050 Andrew Corp....................................... 271,840
32,800 Ascend Communications, Inc........................ 1,625,650
37,400 Bay Networks, Inc................................. 1,206,150
26,900 Cabletron Systems, Inc............................ 361,468
173,150 Cisco Systems, Inc................................ 15,940,621
20,100 DSC Communications Corporation.................... 603,000
25,100 General Instrument Corporation.................... 682,406
13,600 Harris Corp....................................... 607,750
222,800 Lucent Technologies, Inc.......................... 18,534,175
101,600 Motorola, Inc..................................... 5,340,350
88,600 Northern Telecom Ltd.............................. 5,028,050
14,400 Raychem Corp...................................... 425,700
13,500 Scientific Atlanta, Inc........................... 342,562
30,900 Tellabs, Inc...................................... 2,213,212
--------------
55,036,459
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 4.3%
11,700 Adobe System Inc.................................. 496,518
22,600 Apple Computer, Inc............................... 648,337
280,297 Compaq Computer Corp.............................. 7,953,427
8,300 Data General Corp................................. 123,981
109,500 Dell Computer Corp................................ 10,162,968
*84,400 EMC Corp.......................................... 3,782,175
26,400 Gateway 2000 Inc.................................. 1,336,500
175,900 Hewlett-Packard Co................................ 10,532,012
160,200 International Business Machines Corp.............. 18,392,962
36,000 Micron Technology Inc............................. 893,250
46,500 Pitney Bowes, Inc................................. 2,237,933
*41,200 Seagate Technology, Inc........................... 981,075
64,300 Sun Microsystems, Inc............................. 2,793,031
42,500 Unisys Corp....................................... 1,200,625
55,400 Xerox Corp........................................ 5,630,025
--------------
67,164,819
--------------
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
CONSUMER DURABLES -- 2.0%
110,300 Chrysler Corp..................................... $ 6,218,162
13,400 Cooper Tire & Rubber Co........................... 276,375
10,800 Echlin, Inc....................................... 529,875
206,200 Ford Motor Co..................................... 12,165,800
113,600 General Motors Corp............................... 7,583,218
30,450 Genuine Parts Co.................................. 1,052,428
26,600 Goodyear Tire & Rubber Co. (The).................. 1,714,037
20,100 ITT Industries, Inc............................... 751,237
21,000 TRW, Inc.......................................... 1,147,125
--------------
31,438,257
--------------
CONSUMER NON-DURABLES -- 3.8%
9,700 Alberto Culver Co. Class B........................ 281,300
22,500 Avon Products, Inc................................ 1,743,750
16,200 Black & Decker Corporation (The).................. 988,200
4,200 Briggs & Stratton Corporation..................... 157,237
10,100 Centex Corp....................................... 381,275
17,600 Clorox Company (The).............................. 1,678,600
50,300 Colgate Palmolive Co.............................. 4,426,400
6,200 Fleetwood Enterprises, Inc........................ 248,000
12,400 Fruit of the Loom, Inc............................ 411,525
190,500 Gillette Company (The)............................ 10,798,968
18,600 International Flavors & Fragrances, Inc........... 807,937
6,600 Kaufman & Broad Home Corp......................... 209,550
94,600 Kimberly-Clark Corp............................... 4,339,775
11,400 Liz Claiborne, Inc................................ 595,650
28,100 Masco Corp........................................ 1,700,050
16,200 Maytag Corp....................................... 799,875
27,100 Newell Co......................................... 1,349,918
49,400 NIKE, Inc. Class B................................ 2,405,162
228,400 Proctor & Gamble Company (The).................... 20,798,675
9,600 Reebok International Ltd.......................... 265,800
25,500 Rubbermaid, Inc................................... 846,281
6,200 Russell Corp...................................... 187,162
10,400 Snap-On, Inc...................................... 377,000
3,400 Springs Industries, Inc........................... 156,825
15,200 Stanley Works (The)............................... 631,750
10,400 Tupperware Corp................................... 292,500
20,800 V F Corp.......................................... 1,071,200
12,800 Whirlpool Corp.................................... 880,000
--------------
58,830,365
--------------
CONSUMER SERVICES -- 0.8%
17,000 Brunswick Corporation............................. 420,750
25,200 Darden Restaurants, Inc........................... 400,050
55,300 Eastman Kodak Company............................. 4,040,356
17,800 H & R Block, Inc.................................. 749,825
17,200 Harrah's Entertainment, Inc....................... 399,900
22,660 Hasbro, Inc....................................... 890,428
42,500 Hilton Hotels Corp................................ 1,211,250
43,400 Marriott International, Inc....................... 1,405,075
49,400 Mattel, Inc....................................... 2,090,237
*30,500 Mirage Resorts, Incorporated...................... 650,031
7,600 Polaroid Corp..................................... 270,275
22,400 Wendy's International, Inc........................ 526,400
--------------
13,054,577
--------------
ELECTRONICS -- 5.7%
24,100 Advanced Micro Devices, Inc....................... 411,206
37,600 AMP, Inc.......................................... 1,289,062
62,300 Applied Materials, Inc............................ 1,837,850
7,700 EG & G, Inc....................................... 231,000
75,400 Emerson Electric Co............................... 4,552,275
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-16
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRONICS -- (CONTINUED)
553,400 General Electric Co............................... $ 50,359,400
7,400 General Signal Corp............................... 266,400
288,000 Intel Corp........................................ 21,348,000
14,300 Johnson Controls, Inc............................. 817,781
14,300 KLA-Tencor Corporation............................ 395,931
24,000 LSI Logic Corp.................................... 553,500
28,000 National Semiconductor Corp....................... 369,250
32,000 Silicon Graphics, Inc............................. 388,000
8,600 Tektronix, Inc.................................... 304,225
66,400 Texas Instruments, Inc............................ 3,871,950
9,400 Thomas & Betts Corp............................... 462,950
--------------
87,458,780
--------------
ENERGY & SERVICES -- 7.4%
15,600 Amerada Hess Corp................................. 847,275
162,900 Amoco Corp........................................ 6,780,712
10,200 Anadarko Petroleum Corporation.................... 685,312
16,200 Apache Corporation................................ 510,300
12,800 Ashland, Inc...................................... 660,800
54,600 Atlantic Richfield Co............................. 4,265,625
28,900 Baker Hughes, Inc................................. 998,856
30,020 Burlington Resources, Inc......................... 1,292,736
111,700 Chevron Corp...................................... 9,278,081
16,200 Consolidated Natural Gas Company.................. 953,775
29,900 Dresser Industries, Inc........................... 1,317,468
415,900 Exxon Corp........................................ 29,658,868
44,600 Halliburton Co.................................... 1,987,487
8,500 Helmerich & Payne, Inc............................ 189,125
8,100 Kerr-McGee Corp................................... 468,787
10,300 McDermott International, Inc...................... 354,706
133,400 Mobil Corp........................................ 10,221,775
62,300 Occidental Petroleum Corp......................... 1,682,100
18,000 Oryx Energy Co.................................... 398,250
8,100 Pennzoil Co....................................... 410,062
44,700 Phillips Petroleum Co............................. 2,153,981
14,700 Rowan Cos., Inc................................... 285,731
364,700 Royal Dutch Petroleum Co. ADR..................... 19,990,118
84,700 Schlumberger Ltd.................................. 5,786,068
40,654 Sempra Energy..................................... 1,128,147
16,100 Sun Company, Inc.................................. 624,881
92,000 Texaco, Inc....................................... 5,491,250
18,100 Coastal Corporation (The)......................... 1,263,606
49,100 USX-Marathon Group................................ 1,684,743
43,200 Union Pacific Resources Group Inc................. 758,700
41,900 Unocal Corp....................................... 1,497,925
9,300 Western Atlas, Inc................................ 789,337
--------------
114,416,587
--------------
FINANCIAL SERVICES -- 17.4%
27,100 Aetna Life Insurance & Annuity Co................. 2,062,987
73,200 Allstate Corporation (The)........................ 6,702,375
79,100 American Express Co............................... 9,017,400
46,302 American General Corp............................. 3,296,123
122,450 American International Group, Inc................. 17,877,700
29,250 Aon Corp.......................................... 2,054,812
58,963 Associates First Capital Corporation.............. 4,532,780
119,460 Banc One Corp..................................... 6,667,361
116,000 BankAmercia Corp.................................. 10,026,750
49,400 BankBoston Corporation............................ 2,747,875
64,100 Bank of New York Company, Inc. (The).............. 3,890,068
16,700 Bankers Trust NY Corp............................. 1,938,243
24,300 BB&T Corporation.................................. 1,643,287
9,000 Beneficial Corp................................... 1,378,687
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
FINANCIAL SERVICES -- (CONTINUED)
45,150 Charles Schwab Corporation (The).................. $ 1,467,375
144,900 Chase Manhattan Corporation (The)................. 10,939,950
29,700 Chubb Corporation (The)........................... 2,387,137
37,500 CIGNA Corporation................................. 2,587,500
28,700 Cincinnati Financial.............................. 1,101,362
76,800 Citicorp.......................................... 11,462,400
26,850 Comerica, Inc..................................... 1,778,812
34,300 Conseco Inc....................................... 1,603,525
18,500 Countrywide Credit Industries Inc................. 938,875
25,500 Equifax Inc....................................... 925,968
115,200 Federal Home Loan Mortgage Corp................... 5,421,600
176,100 Federal National Mortgage Association............. 10,698,075
44,775 Fifth Third Bancorp............................... 2,820,825
49,500 First Chicago Corp................................ 4,386,937
164,630 First Union Corp.................................. 9,589,697
48,300 Fleet Financial Group, Inc........................ 4,033,050
43,000 Franklin Resources, Inc........................... 2,322,000
13,700 General Re Corp................................... 3,472,950
9,700 Golden West Financial Corp........................ 1,031,231
23,200 Greentree Financial Corp.......................... 993,250
18,600 H.F. Ahmanson & Co................................ 1,320,600
54,700 Household International Corp...................... 2,721,325
32,600 Huntington Bancshares, Inc........................ 1,092,100
30,200 J.P. Morgan & Co., Inc............................ 3,537,175
19,400 Jefferson Pilot Corp.............................. 1,123,987
74,800 Keycorp........................................... 2,664,750
20,100 Lehman Brothers Holdings, Inc..................... 1,559,006
18,600 Lincoln National Corp............................. 1,699,575
17,100 MBIA, Inc......................................... 1,280,362
85,350 MBNA Corp......................................... 2,816,550
19,900 MGIC Investment................................... 1,135,543
43,350 Marsh & McLennan Companies, Inc................... 2,619,965
43,300 Mellon Bank Corp.................................. 3,014,762
22,300 Mercantile Bancorporation Inc..................... 1,123,362
58,800 Merrill Lynch & Co., Inc.......................... 5,424,300
101,975 Morgan Stanley Dean Witter Discover & Co.......... 9,317,965
55,900 National City Corp................................ 3,968,900
162,667 NationsBank Corp.................................. 12,444,025
19,000 Northern Trust Corporation........................ 1,448,750
128,400 Norwest Corp...................................... 4,798,950
51,900 PNC Bank Corp..................................... 2,792,868
12,600 Progressive Corporation (The)..................... 1,776,600
17,300 Providian Corp.................................... 1,359,131
18,600 Republic New York Corp............................ 1,170,637
24,700 SAFECO Corp....................................... 1,122,306
40,280 St. Paul Companies, Inc. (The).................... 1,694,277
27,400 State Street Corporation.......................... 1,904,300
30,000 Summit Bancorp.................................... 1,425,000
35,900 SunTrust Banks, Inc............................... 2,919,118
44,750 Synovus Financial Corp............................ 1,062,812
25,500 Torchmark Corporation............................. 1,166,625
11,500 Transamerica Corporation.......................... 1,323,937
195,205 Travelers Group, Inc.............................. 11,834,303
24,200 UNUM Corporation.................................. 1,343,100
125,219 U.S. Bancorp...................................... 5,384,417
35,000 Wachovia Corporation.............................. 2,957,500
65,600 Washington Mutual, Inc............................ 2,849,500
14,800 Wells Fargo & Company............................. 5,461,200
--------------
268,458,550
--------------
FOOD, BEVERAGE & TOBACCO -- 7.2%
6,300 Adolph Coors Company Class B...................... 214,200
83,400 Anheuser-Busch Cos., Inc.......................... 3,935,437
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-17
<PAGE>
HARTFORD INDEX HLS, FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
FOOD, BEVERAGE & TOBACCO -- (CONTINUED)
96,955 Archer-Daniels-Midland Company.................... $ 1,878,503
48,900 Bestfoods......................................... 2,839,256
11,800 Brown-Forman Corporation Class B.................. 758,150
77,600 Campbell Soup Company............................. 4,122,500
419,800 Coca-Cola Company (The)........................... 35,892,900
80,800 ConAgra, Inc...................................... 2,560,350
29,200 Fortune Brands Inc................................ 1,122,375
28,900 General Mills, Inc................................ 1,839,287
62,200 H.J. Heinz Company................................ 3,490,975
24,300 Hershey Foods Corporation......................... 1,676,700
70,000 Kellogg Company................................... 2,629,375
253,500 PepsiCo, Inc...................................... 10,441,031
412,100 Philip Morris Companies, Inc...................... 16,226,437
23,600 Quaker Oats Company (The)......................... 1,296,525
18,200 Ralston Purina Company............................ 2,125,987
79,400 Sara Lee Corporation.............................. 4,441,437
58,900 Seagram Company Ltd. (The)........................ 2,411,218
25,830 Tricon Global Restaurants, Inc.................... 818,488
31,400 UST, Inc.......................................... 847,800
108,900 Unilever NV-New York Shares....................... 8,596,293
19,700 Wrigley (W.M.) Jr. Company........................ 1,930,600
--------------
112,095,824
--------------
HEALTH CARE -- 12.2%
262,400 Abbott Laboratories............................... 10,725,600
11,100 Allergan, Inc..................................... 514,782
14,500 Alza Corporation.................................. 627,125
222,900 American Home Products Corporation and
Subsidiaries.................................... 11,535,075
43,200 Amgen, Inc........................................ 2,824,200
9,400 Bausch & Lomb, Inc................................ 471,175
47,600 Baxter International, Inc......................... 2,561,475
20,800 Becton, Dickinson and Company..................... 1,614,600
19,000 Biomet, Inc....................................... 628,187
33,100 Boston Scientific Corporation..................... 2,370,787
169,300 Bristol-Myers Squibb Company...................... 19,458,918
9,700 C.R. Bard, Inc.................................... 369,206
18,700 Cardinal Health, Inc.............................. 1,753,125
*109,200 Columbia/HCA Healthcare Corporation............... 3,180,450
188,900 Eli Lilly and Company............................. 12,479,206
25,700 Guidant Corporation............................... 1,832,731
68,000 Healthsouth Corporation........................... 1,814,750
27,800 Humana, Inc....................................... 867,012
229,000 Johnson & Johnson................................. 16,888,750
20,100 Loews Corporation................................. 1,751,212
12,400 Mallinckrodt, Inc................................. 368,125
10,800 Manor Care, Inc................................... 415,125
79,700 Medtronic, Inc.................................... 5,080,875
204,000 Merck & Co., Inc.................................. 27,285,000
7,400 Millipore Corporation............................. 201,650
21,200 Pall Corporation.................................. 434,600
221,900 Pfizer, Inc....................................... 24,117,756
86,400 Pharmacia & Upjohn, Inc........................... 3,985,200
41,500 Pioneer Hi-Bred International, Inc................ 1,717,062
124,700 Schering-Plough Corporation....................... 11,425,637
42,900 Service Corporation International................. 1,839,337
4,500 Shared Medical Systems Corporation................ 330,468
14,300 St. Jude Medical, Inc............................. 526,418
35,650 SunAmerica, Inc................................... 2,047,646
*52,100 Tenet Healthcare Corporation...................... 1,628,125
32,000 United HealthCare Corporation..................... 2,032,000
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
HEALTH CARE -- (CONTINUED)
12,900 United States Surgical Corporation................ $ 588,562
139,100 Warner-Lambert Company............................ 9,650,062
--------------
187,941,994
--------------
INDUSTRIAL MATERIALS -- 4.1%
18,400 ARMCO, Inc........................................ 117,300
6,900 ASARCO, Inc....................................... 153,525
40,100 Air Products & Chemicals, Inc..................... 1,604,000
38,700 Alcan Aluminum Ltd................................ 1,069,087
33,200 Allegheny Teledyne, Inc........................... 759,450
29,300 Aluminum Company of America....................... 1,931,968
6,900 Armstrong World Industries, Inc................... 464,887
12,200 B.F. Goodrich Company (The)....................... 605,425
63,200 Barrick Gold Corp................................. 1,212,650
39,100 Battle Mountain Gold Company...................... 232,156
9,000 Bemis Company, Inc................................ 367,875
21,800 Bethlehem Steel Corporation....................... 271,137
9,600 Boise Cascade Corporation......................... 314,400
16,400 Champion International Corporation................ 806,675
21,900 Crown Cork & Seal Company, Inc.................... 1,040,250
15,800 Cyprus Amax Minerals Company...................... 209,350
38,600 Dow Chemical Company (The)........................ 3,732,137
192,500 du Pont (E.I.) de Nemours & Co.................... 14,365,312
13,300 Eastman Chemical Company.......................... 827,925
21,900 Ecolab, Inc....................................... 678,900
24,600 Englehard Corporation............................. 498,150
5,900 FMC Corporation................................... 402,306
30,600 Freeport-McMoran Copper & Gold, Inc............... 464,737
15,800 Georgia-Pacific Corporation....................... 931,212
10,200 Great Lakes Chemical Corporation.................. 402,262
16,400 Hercules, Inc..................................... 674,450
35,900 Homestake Mining Company.......................... 372,462
28,300 Inco Ltd.......................................... 385,587
8,300 Inland Steel Industries, Inc...................... 233,956
51,400 International Paper Company....................... 2,210,200
37,500 James River Corporation of Virginia............... 1,668,750
18,700 Louisiana-Pacific Corporation..................... 341,275
17,800 Mead Corporation (The)............................ 565,150
101,000 Monsanto Company.................................. 5,643,375
22,200 Morton International, Inc......................... 555,000
11,300 Nalco Chemical Company............................ 396,912
26,593 Newmont Mining Corporation........................ 628,259
15,000 Nucor Corporation................................. 690,000
9,100 Owens-Corning..................................... 371,393
26,300 Owens-Illinois Group, Inc......................... 1,176,925
30,300 PPG Industries, Inc............................... 2,107,743
10,000 Phelps Dodge Corporation.......................... 571,875
41,800 Placer Dome, Inc.................................. 491,150
4,900 Potlatch Corporation.............................. 205,800
26,800 Praxair, Inc...................................... 1,254,575
12,600 Reynolds Metal Company............................ 704,812
10,400 Rohm & Haas Company............................... 1,080,950
14,025 Sealed Air........................................ 515,411
29,400 Sherman-Williams Company (The).................... 973,875
17,100 Sigma-Aldrich Corporation......................... 600,637
16,900 Stone Container Corporation....................... 264,062
9,600 Temple-Inland, Inc................................ 517,200
14,600 USX Corporation................................... 481,800
11,900 Union Camp Corporation............................ 590,537
23,100 Union Carbide Corporation......................... 1,232,962
12,600 W.R. Grace Co..................................... 214,987
17,400 Westvaco Corporation.............................. 491,550
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-18
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
INDUSTRIAL MATERIALS -- (CONTINUED)
34,000 Weyerhaeuser Company.............................. $ 1,570,375
18,900 Willamette Industries, Inc........................ 604,800
16,400 Worthington Industries, Inc....................... 247,025
--------------
64,098,896
--------------
MANUFACTURING -- 2.4%
4,800 Aeroquip-Vickers, Inc............................. 280,200
19,900 Avery Dennison Corporation........................ 1,069,625
5,100 Ball Corporation.................................. 204,956
12,800 Case Corporation.................................. 617,600
62,300 Caterpillar, Inc.................................. 3,294,112
6,800 Cincinnati Milacron, Inc.......................... 165,325
20,600 Cooper Industries, Inc............................ 1,131,712
39,400 Corning Incorporated.............................. 1,369,150
7,800 Crane Co.......................................... 378,787
6,500 Cummins Engine Company, Inc....................... 333,125
17,900 Dana Corporation.................................. 957,650
42,500 Deere & Company................................... 2,247,187
37,800 Dover Corporation................................. 1,294,650
12,200 Eaton Corporation................................. 948,550
8,100 Harnischfeger Industries, Inc..................... 229,331
21,700 Honeywell, Inc.................................... 1,813,306
42,500 Illinois Tool Works, Inc.......................... 2,834,218
28,150 Ingersoll-Rand Company............................ 1,240,359
69,500 Minnesota Mining & Manufacturing Company.......... 5,712,031
1,400 NACCO Industries, Inc............................. 180,950
12,300 Navistar International Corporation................ 355,162
13,300 PACCAR, Inc....................................... 694,925
18,850 Parker-Hannifin Corporation....................... 718,656
8,300 Perkin-Elmer Corporation (The).................... 516,156
29,000 Tenneco, Inc...................................... 1,103,812
27,100 Thermo Electron Corporation....................... 926,481
10,700 Timken Company (The).............................. 329,693
99,100 Tyco International, Ltd........................... 6,243,300
--------------
37,191,009
--------------
MEDIA & SERVICES -- 4.4%
97,300 Airtouch Communications, Inc...................... 5,685,968
*122,100 CBS Corporation................................... 3,876,675
*21,000 Clear Channel Communications, Inc................. 2,291,625
27,600 Cognizant Corporation............................. 1,738,800
62,600 Comcast Corporation Class A....................... 2,541,168
29,000 Dun & Bradstreet Corporation (The)................ 1,047,625
16,400 Dow Jones & Company, Inc.......................... 914,300
48,300 Gannett Co., Inc.................................. 3,432,318
12,000 Harcourt General, Inc............................. 714,000
72,900 HBO & Company..................................... 2,569,725
23,150 Interpublic Group of Companies, Inc. (The)........ 1,404,915
12,500 King World Productions, Inc....................... 318,750
13,500 Knight-Ridder, Inc................................ 743,343
16,900 McGraw-Hill Companies, Inc. (The)................. 1,378,406
103,200 Mediaone Group Inc................................ 4,534,350
9,000 Meredith Corporation.............................. 422,437
16,300 New York Times Company (The)...................... 1,291,775
46,500 Nextel Communications Inc......................... 1,156,687
28,900 Omnicom Group, Inc................................ 1,441,387
86,200 TCI Communications, Inc........................... 3,313,312
100,400 Time Warner, Inc.................................. 8,577,925
15,100 Times Mirror Co.-Class A.......................... 949,412
20,900 Tribune Co........................................ 1,438,181
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
MEDIA & SERVICES -- (CONTINUED)
60,100 Viacom, Inc.-Class B.............................. $ 3,500,825
115,900 Walt Disney Company (The)......................... 12,176,743
--------------
67,460,652
--------------
REAL ESTATE -- 0.0%
7,200 Pulte Corporation................................. 215,100
--------------
RETAIL -- 6.2%
493 Abercrombie & Fitch............................... 21,691
41,800 Albertson's, Inc.................................. 2,165,762
12,400 American Greetings Corporation.................... 631,625
46,500 American Stores Company........................... 1,124,718
25,800 AutoZone, Inc..................................... 823,987
65,000 CVS Corporation................................... 2,530,937
144,745 Cendant Corporation............................... 3,021,551
16,800 Circuit City Stores............................... 787,500
18,300 Consolidated Stores Corporation................... 663,375
36,500 Costco Companies, Inc............................. 2,301,781
74,300 Dayton Hudson Corporation......................... 3,603,550
18,900 Dillard's, Inc.................................... 783,168
35,700 Federated Department Stores, Inc.................. 1,921,106
67,350 Gap Inc........................................... 4,150,443
10,200 Giant Food, Inc................................... 439,237
8,500 Great Atlantic & Pacific Tea Company, Inc.
(The)........................................... 214,906
124,450 Home Depot, Inc. (The)............................ 10,337,128
42,600 J.C. Penney Company, Inc.......................... 3,080,512
6,600 Jostens, Inc...................................... 159,225
83,100 Kmart Corporation................................. 1,599,675
43,400 Kroger Company (The).............................. 1,860,775
38,400 Limited Inc. (The)................................ 1,272,000
6,600 Longs Drug Store Corporation...................... 190,575
59,600 Lowe's Companies, Inc............................. 2,417,525
39,300 May Department Stores Company (The)............... 2,574,150
117,200 McDonald's Corporation............................ 8,086,800
6,300 Mercantile Stores Company, Inc.................... 497,306
13,200 Nordstrom, Inc.................................... 1,019,700
10,800 Pep Boys - Manny, Moe & Jack (The)................ 204,525
43,800 Rite Aid Corporation.............................. 1,645,237
66,700 Sears Roebuck & Co................................ 4,072,868
55,000 TJX Companies, Inc. (The)......................... 1,326,875
17,600 Tandy Corporation................................. 933,900
47,400 Toys "R" Us, Inc.................................. 1,116,862
22,900 Venator Group Inc................................. 437,962
84,200 Walgreen Co....................................... 3,478,512
382,000 Wal-Mart Stores, Inc.............................. 23,206,500
25,300 Winn-Dixie Stores, Inc............................ 1,295,043
--------------
95,998,992
--------------
SOFTWARE & SERVICES -- 4.2%
7,900 Autodesk, Inc..................................... 305,137
50,900 Automatic Data Processing, Inc.................... 3,709,337
*12,300 Ceridian Corporation.............................. 722,625
92,950 Computer Associates International, Inc............ 5,164,534
*26,500 Computer Sciences Corporation..................... 1,696,000
75,700 First Data Corporation............................ 2,521,756
*418,600 Microsoft Corporation............................. 45,365,775
59,700 Novell, Inc....................................... 761,175
165,450 Oracle Corporation................................ 4,063,865
45,900 Parametric Technology Corporation................. 1,245,037
--------------
65,555,241
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-19
<PAGE>
HARTFORD INDEX HLS, FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TRANSPORTATION -- 1.1%
31,000 AMR Corporation................................... $ 2,580,750
26,600 Burlington Northern Santa Fe Corporation.......... 2,611,787
37,100 CSX Corporation................................... 1,688,050
12,700 Delta Air Lines, Inc.............................. 1,641,475
24,960 FDX Corporation................................... 1,566,240
55,700 Laidlaw, Inc...................................... 678,843
64,200 Norfolk Southern Corporation...................... 1,913,962
13,000 Ryder Systems, Inc................................ 410,312
37,600 Southwest Airlines Co............................. 1,113,900
42,100 Union Pacific Corporation......................... 1,857,662
17,100 US Airways Group, Inc............................. 1,355,175
--------------
17,418,156
--------------
UTILITIES -- 9.2%
276,500 AT&T Corp......................................... 15,795,062
31,300 Alltel Corporation................................ 1,455,450
23,300 Ameren Corporation................................ 926,175
32,300 American Electric Power........................... 1,465,612
186,100 Ameritech Corporation............................. 8,351,237
25,100 Baltimore Gas & Electric Company.................. 779,668
264,362 Bell Atlantic Corporation......................... 12,061,516
168,800 BellSouth Corporation............................. 11,330,700
25,600 Carolina Power and Light Company.................. 1,110,400
36,100 Central and Southwest Corporation................. 970,187
26,800 CINergy Corp...................................... 938,000
14,200 Columbia Gas System, Inc. (The)................... 789,875
40,000 Consolidated Edison Company of New York, Inc...... 1,842,500
24,700 DTE Energy Co..................................... 997,262
32,900 Dominion Resources, Inc........................... 1,340,675
61,252 Duke Energy Corporation........................... 3,629,181
3,500 Eastern Enterprises............................... 150,062
61,600 Edison International.............................. 1,821,050
55,900 Enron Corp........................................ 3,022,093
41,500 Entergy Corporation............................... 1,193,125
31,000 FPL Group, Inc.................................... 1,953,000
39,200 Firstenergy Corp.................................. 1,205,400
29,100 Frontier Corporation.............................. 916,650
21,600 GPU, Inc.......................................... 816,750
163,000 GTE Corporation................................... 9,066,875
50,292 Houston Industries, Inc........................... 1,552,765
123,000 MCI Communications Corporation.................... 7,149,375
8,200 NICOR, Inc........................................ 329,025
28,300 Niagara Mohawk Power Corporation.................. 422,731
25,300 Northern States Power Company..................... 724,212
5,300 Oneok, Inc........................................ 211,337
64,900 PG & E Corporation................................ 2,048,406
28,200 PP & L Resources, Inc............................. 639,787
50,500 Pacificorp........................................ 1,142,562
37,800 Peco Energy Company............................... 1,103,287
6,000 Peoples Energy Corporation........................ 231,750
39,400 Public Service Enterprise Group, Inc.............. 1,356,837
312,120 SBC Communications, Inc........................... 12,484,800
18,700 Sonat, Inc........................................ 722,287
118,300 Southern Company (The)............................ 3,275,431
73,200 Sprint Corporation................................ 5,160,600
47,715 Texas Utilities Company........................... 1,986,136
87,944 U.S. West, Inc.................................... 4,133,349
36,900 Unicom Corporation................................ 1,293,806
72,100 Williams Companies, Inc. (The).................... 2,433,375
175,400 WorldCom, Inc..................................... 8,495,937
--------------
140,826,300
--------------
<CAPTION>
MARKET
SHARES VALUE
--------- --------------
<C> <S> <C>
WASTE MANAGEMENT -- 0.3%
31,400 Browning-Ferris Industries, Inc................... $ 1,091,150
80,804 Waste Management, Inc............................. 2,828,140
--------------
3,919,290
--------------
Total common stocks............................... $1,523,061,013
--------------
--------------
PRINCIPAL
AMOUNT
---------
SHORT-TERM SECURITIES -- 1.2%
COMMERCIAL PAPER -- 0.0%
$ 200,000 5.01% due 09/24/98.............................. $ 197,829
150,000 5.07% due 09/17/98.............................. 148,352
--------------
346,181
--------------
U.S. TREASURY BILLS -- 0.3%
500,000 4.98% due 08/20/98.............................. 496,541
700,000 5.00% due 08/20/98.............................. 695,216
500,000 5.01% due 09/17/98.............................. 494,085
1,500,000 5.03% due 08/20/98.............................. 1,489,520
500,000 5.05% due 08/20/98.............................. 496,493
50,000 5.055% due 08/20/98............................. 49,648
250,000 5.065% due 08/20/98............................. 248,241
--------------
3,969,744
--------------
REPURCHASE AGREEMENT -- 0.9%
13,616,000 Interest in $131,291,000 joint repurchase
agreement with State Street Bank dated 06/30/98
at 5.9%, to be repurchased at $13,618,232 on
07/01/98; (collateralized by $131,291,000 U.S.
Treasury Bonds 6.5% due 11/15/26)............... 13,616,000
--------------
Total short-term securities....................... $ 17,931,925
--------------
--------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $1,030,184,572).............. 98.5% $1,523,061,013
Total short-term securities (cost $17,931,929)......... 1.2 17,931,925
------ --------------
Total investment in securities (total cost
$1,048,116,501)...................................... 99.7 1,540,992,938
Excess of cash, receivables and other assets over
liabilities.......................................... 0.3 5,567,111
------ --------------
Net assets (applicable to $3.30 per share based on
468,649,820 shares outstanding)...................... 100.0% $1,546,560,049
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 1,000,000,000 shares
authorized; 468,649,820 shares outstanding................... $ 46,864,982
Capital surplus................................................ 991,480,960
Accumulated undistributed net investment income................ 8,315,909
Accumulated undistributed net realized gain on investments.....
6,882,368
Unrealized appreciation of futures contracts**................. 139,393
Unrealized appreciation of investments......................... 492,876,437
--------------
Net assets, applicable to shares outstanding................... $1,546,560,049
--------------
--------------
</TABLE>
* Non-income producing during period.
** The Fund had 66 Standard & Poor's 500 September 1998 futures contracts open
June 30, 1998. The contracts had a value of $18,859,500.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-20
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- --------------
<C> <S> <C>
COMMON STOCKS -- 88.1%
ARGENTINA -- 0.3%
116,600 Telefonica De Argentina-ADR... $ 3,782,212
--------------
AUSTRALIA -- 3.7%
*852,495 Amp Limited................... 9,977,413
1,128,000 Australia & New Zealand
Banking..................... 7,781,415
1,289,000 CSR Ltd....................... 3,719,659
2,200,016 News Corporation Ltd.......... 17,955,833
3,944,028 Pasminco Limited.............. 3,004,065
1,327,819 WMC Limited................... 3,996,128
--------------
46,434,513
--------------
BRAZIL -- 0.6%
109,723,896 Cia Energetica Minas.......... 3,396,240
37,023,800 Telecommunicacoes Brasileiras
SA.......................... 4,081,364
--------------
7,477,604
--------------
CANADA -- 0.4%
86,500 Canadian Natl Railway Co...... 4,595,312
--------------
CHILE -- 0.2%
106,700 Cia Telecom Chile ADR......... 2,167,343
--------------
DENMARK -- 2.2%
89,950 Novov -- nordisk.............. 12,399,653
166,680 Unidanmark AS-A Shares
(Reg.)...................... 14,978,626
--------------
27,378,279
--------------
FINLAND -- 2.0%
765,000 Metsa-Serla-B Shares.......... 7,389,978
85,720 Nokia OYJ Class A Shares...... 6,304,223
150,100 Nokia Corp.- Sponsored ADR.... 10,891,631
--------------
24,585,832
--------------
FRANCE -- 15.5%
40,308 AGF-Assurance Generale de
France...................... 2,280,731
111,930 Alcatel Alsthom............... 22,789,475
4,577 Allianz BCVG.................. 26,609
35,849 Assurance Generale**.......... 2,028,429
134,840 Axa UAP....................... 15,165,524
263,521 Banque National de Paris**.... 21,531,384
4,290 Carrefour Supermarche......... 2,714,054
66,369 Compagnie de Saint Gobain..... 12,305,539
123,310 Elf Aquitaine................. 17,335,924
295,110 Michelin...................... 17,034,881
239,558 Rhone-Poulenc SA.............. 13,511,228
108,514 Societe Generale Class A...... 22,560,609
113,343 Total SA B Shares............. 14,734,894
145,280 Vivendi....................... 31,021,432
--------------
195,040,713
--------------
GERMANY -- 12.0%
28,220 Adidas AG..................... 4,877,825
742,650 Bayer AG...................... 38,304,383
337,850 Dresdner Bank AG.............. 18,211,737
302,560 Hoechst AG.................... 15,102,572
27,610 Karstadt AG................... 13,338,208
36,470 M.A.N. AG..................... 14,183,633
172,290 Mannesmann AG................. 17,476,844
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
GERMANY -- (CONTINUED)
*162,240 Metallgesellschaft AG......... $ 3,325,632
193,290 Siemans AG.................... 11,757,807
201,920 Veba AG....................... 13,759,386
--------------
150,338,027
--------------
HONG KONG -- 0.4%
*1,058,000 Cheung Kong Holdings Ltd...... 5,202,220
--------------
IRELAND -- 0.4%
1,835,877 Smurfit (Jefferson) Group..... 5,529,011
--------------
ITALY -- 1.5%
126,300 Gucci Group Registerd
Shares...................... 6,693,900
1,617,400 Telecom Italia Spa............ 11,906,093
--------------
18,599,093
--------------
JAPAN -- 9.2%
70,700 Advantest Corp................ 3,800,280
201,000 Dai Nippon Printing........... 3,207,947
1,265,000 Daiwa Securities, Inc......... 5,441,545
283,000 Fuji Machine Manufacturing
Co.......................... 7,503,980
331,000 Fuji Photo Film Co............ 11,519,471
510,000 Jusco Co. Ltd................. 9,352,234
171,000 Kao Corp...................... 2,636,739
101,000 Mabuchi Motor Co. Ltd......... 6,404,149
170,000 Matsumotokiyoshi.............. 5,977,590
406,000 Matsushita Electric Industrial
Co.......................... 6,523,614
10,480 Nippon Telegraph &
Telephone................... 8,683,934
556,000 Olympus Optical............... 4,831,472
*62,000 Rohm Company, Ltd............. 6,365,961
466,000 Sanwa Bank Ltd................ 4,166,919
10,400 Shohkoh Fund.................. 2,555,319
174,700 Sony Corporation.............. 15,042,438
4,600 Square Co. Ltd................ 122,635
2,023,000 Toshiba Corporation........... 8,264,876
99,000 Uni-Charm Corporation......... 3,666,534
--------------
116,067,637
--------------
MEXICO -- 1.9%
1,680,000 Coca Cola Femsa SA............ 2,947,500
1,539,500 Grupo Financiero Banamex...... 2,924,362
193,500 Grupo Televisa SA............. 3,654,059
1,635,700 Kimberly-Clark................ 5,695,741
169,100 Telefonos de Mexico SA ADR.... 8,127,368
--------------
23,349,030
--------------
NETHERLANDS -- 7.2%
323,957 ING Groep N.V................. 21,212,567
214,000 Kon Knp N.V................... 13,600,246
326,400 Philips Electronics N.V....... 27,437,713
109,000 Royal Dutch Petroleum......... 5,974,562
293,900 Unilever NV-CVA............... 23,318,723
--------------
91,543,811
--------------
NEW ZEALAND -- 0.3%
107,150 Telecom Corp. New Zealand
ADR......................... 3,509,162
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-21
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
NEW ZEALAND -- (CONTINUED)
272,000 Telecom Corp. New Zealand
Ltd......................... $ 581,709
--------------
4,090,871
--------------
NORWAY -- 0.4%
356,500 Saga Petroleum................ 5,482,085
--------------
PHILLIPINES -- 0.2%
2,565,600 Ayala Land Inc................ 738,300
579,000 Manila Electric Co............ 1,527,334
--------------
2,265,634
--------------
SINGAPORE -- 0.3%
1,732,000 Overseas Union Bank........... 3,793,117
--------------
SOUTH AFRICA -- 0.0%
27,600 De Beers-Centenary............ 488,369
--------------
SPAIN -- 3.3%
52,600 Banco Popular Espanol......... 4,494,140
237,000 Banco Santander SA............ 6,076,326
510,900 Endesa SA..................... 11,196,481
137,872 Telefonica De Espana SA ADR... 19,172,825
--------------
40,939,772
--------------
SWEDEN -- 3.1%
1,752,470 Nordbanken Holding AB......... 12,855,194
142,350 Pharmacia & Upjohn............ 6,550,820
94,300 Sparbanken Sverige AB-A
Shares...................... 2,837,887
552,660 Volvo......................... 16,458,636
--------------
38,702,537
--------------
SWITZERLAND -- 4.6%
2,840 Cie Financial Richemont....... 3,716,613
64,840 Credit Suisse Group........... 14,427,308
17,550 Holderbank Financial Glarus
B........................... 22,330,732
8,119 Nestle SA (Reg.).............. 17,374,790
--------------
57,849,443
--------------
THAILAND -- 0.0%
450,500 Bangkok Bank.................. 553,805
--------------
UNITED KINGDOM -- 18.4%
952,110 Allied Irish Banks PLC........ 13,765,196
1,074,300 B.A.T. Industries PLC......... 10,727,943
630,114 Bass PLC...................... 11,775,080
317,004 BOC Group PLC................. 4,326,580
1,164,711 British Petroleum Co. PLC..... 16,955,490
560,100 British Telecom Co. PLC....... 6,892,143
682,263 BTR PLC....................... 1,938,051
1,174,900 Compass Group PLC............. 13,526,228
157,015 Cookson Group PLC............. 539,678
1,104,092 Diageo PLC.................... 13,143,952
198,000 Granada Group PLC............. 3,647,211
853,300 Great Universal Stores........ 11,254,607
512,100 HSBC Holdings PLC............. 12,996,030
491,500 Lloyds TSB Group PLC.......... 6,863,975
336,700 Marks & Spencer PLC........... 3,072,961
420,100 Next PLC...................... 3,616,838
755,488 PowerGen PLC.................. 10,462,426
794,142 Reckitt & Colman PLC.......... 15,158,314
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
UNITED KINGDOM -- (CONTINUED)
630,881 Royal & Sun Alliance Insurance
Group....................... $ 6,436,809
370,400 Royal Bank of Scotland
Group....................... 6,421,156
289,700 Siebe PLC..................... 5,795,546
1,897,085 SmithKline Beecham PLC........ 23,090,791
570,800 Standard Chartered PLC........ 6,480,952
1,832,900 WPP Group PLC................. 12,064,588
235,600 Zeneca Group PLC.............. 10,122,301
--------------
231,074,846
--------------
Total common stocks........... $1,107,331,916
--------------
--------------
PREFERRED STOCKS -- 3.4%
BRAZIL -- 0.8%
8,644,900 Banco Itau SA................. $ 4,895,707
50,459,900 Cia Brasileiro Distribution... 1,103,776
19,211,000 Petroleo Brasileiro........... 3,571,104
--------------
9,570,587
--------------
GERMANY -- 2.4%
104,810 Henkel........................ 10,422,737
51,100 Hornbach Holding AG........... 4,686,174
15,470 Sap AG - Vorzug............... 10,515,973
7,020 Sap AG........................ 4,258,590
--------------
29,883,474
--------------
INDIA -- 0.2%
4,135,100 Cervejaria Brahma............. 2,558,054
--------------
Total preferred stocks........ $ 42,012,115
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 8.0%
REPURCHASE AGREEMENT
$101,184,000 Interest in $1,111,215,000
joint repurchase agreement
with State Street Bank dated
06/30/98 at 5.8%, to be
repurchased at $101,200,302
on 07/01/98; (Collateralized
by $421,318,000 U.S.
Treasury Notes 5.75%-7.825%
due 05/15/99-11/15/04,
563,474,000 U.S. Treasury
Bonds 8.00%-11.125% due
02/15/15-08/15/25,
121,000,000 U.S. Treasury
Strips (principal) 0% due
08/15/04-08/15/07 and
5,423,000 U.S. Treasury
Bills 0% due 08/13/98)...... $ 101,184,000
--------------
--------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $951,970,783)...... 88.1% $ 1,107,331,916
Total preferred stocks (cost $36,530,426).... 3.4 42,012,115
Total short-term securities (cost
$101,184,000).............................. 8.0 101,184,000
------ ----------------
Total investment in securities (total cost
$1,089,685,209)............................ 99.5 1,250,528,031
Excess of cash, receivables and other assets
over liabilities........................... 0.5 5,830,050
------ ----------------
Net assets................................... 100.0% $ 1,256,358,081
------ ----------------
------ ----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-22
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 1,500,000,000
shares authorized; 887,753,488 shares outstanding....
$ 88,775,349
Capital surplus........................................
998,738,972
Accumulated undistributed net investment income........
12,439,328
Accumulated net realized loss on investments...........
(4,223,955)
Unrealized appreciation of investments.................
160,842,822
Unrealized depreciation on translation on other assets
and liabilities in foreign currencies................
(214,435)
--------------
Net assets.............................................
$1,256,358,081
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
-------
<S> <C>
Class IA
Net asset value per share ($1,256,074,022 DIVIDED BY
887,475,218 shares outstanding)......................
$1.42
-----
-----
Class IB
Net asset value per share ($284,059 DIVIDED BY 278,270
shares outstanding)..................................
$1.02
-----
-----
</TABLE>
* Non-income producing during period.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1998,
the market value of these securities amounted to $23,559,813, or 2% of net
assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-23
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- 96.4%
AEROSPACE & DEFENSE -- 1.9%
229,300 Northrop Grumman
Corporation................. $ 23,646,562
297,700 United Technologies
Corporation................. 27,537,250
--------------
51,183,812
--------------
COMPUTERS & OFFICE EQUIPMENT -- 1.2%
304,200 Xerox Corporation............. 30,914,325
--------------
CONSUMER DURABLES -- 1.3%
533,100 Cooper Tire & Rubber
Company..................... 10,995,187
271,100 Ford Motor Company............ 15,994,900
163,300 TRW, Inc...................... 8,920,262
--------------
35,910,349
--------------
CONSUMER NON-DURABLES -- 3.1%
199,200 Clorox Company (The).......... 18,998,700
392,200 Colgate-Palmolive Company..... 34,513,600
635,300 Kimberly-Clark Corporation.... 29,144,387
--------------
82,656,687
--------------
CONSUMER SERVICES -- 1.4%
528,500 Eastman Kodak Company......... 38,613,531
--------------
ELECTRONICS -- 6.2%
264,900 AMP Incorporated.............. 9,105,937
1,237,860 General Electric Company...... 112,645,260
349,600 Johnson Controls, Inc......... 19,992,750
476,500 Thomas & Betts Corporation.... 23,467,625
--------------
165,211,572
--------------
ENERGY & SERVICES -- 10.7%
302,800 Ashland, Inc.................. 15,632,050
405,600 Chevron Corporation........... 33,690,150
909,800 Eni Ads....................... 59,137,000
254,000 Exxon Corporation............. 18,113,375
159,100 Pennzoil Company.............. 8,054,437
181,700 Phillips Petroleum Company.... 8,755,668
519,600 Repsol S.A. ADR............... 28,578,000
423,800 Royal Dutch Petroleum......... 23,229,537
424,824 Sempra Energy................. 11,788,852
731,705 Sun Company, Inc.............. 28,399,312
1,199,300 USX Corporation............... 41,150,981
448,400 Wisconsin Energy
Corporation................. 13,620,150
--------------
290,149,512
--------------
FINANCIAL SERVICES -- 17.7%
350,700 CIGNA Corporation............. 24,198,300
764,600 Citicorp...................... 114,116,550
1,028,700 Federal National Mortgage
Association................. 62,493,525
704,000 First Union Corporation....... 41,008,000
744,750 Marsh & McLennan Companies,
Inc......................... 45,010,828
1,306,900 Pacific Century Financial
Corporation................. 31,365,600
465,700 Peoples Heritage Financial
Group, Inc.................. 11,002,162
311,300 Pinnacle West Capital
Corporation................. 14,008,500
2,612,200 U.S. Bancorp.................. 112,324,600
227,700 Wachovia Corporation.......... 19,240,650
--------------
474,768,715
--------------
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
FOOD, BEVERAGE & TOBACCO --
5.8%
1,317,575 Flowers Industries, Inc....... $ 26,927,939
547,200 H.J. Heinz Company............ 30,711,600
237,400 Interstate Bakeries........... 7,878,712
866,500 McCormick & Company,
Incorporated................ 30,950,296
666,600 Nabisco Holdings
Corporation................. 24,039,262
689,100 Philip Morris Companies,
Inc......................... 27,133,312
311,100 Schweitzer Mauduit
International............... 9,021,900
--------------
156,663,021
--------------
FOREIGN SECURITIES -- 0.3%
2,985,522 Southcorp Limited............. 8,670,765
--------------
HEALTH CARE -- 13.0%
899,300 Abbott Laboratories........... 36,758,887
783,000 American Home Products
Corporation and
Subsidiaries................ 40,520,250
338,400 Baxter International Inc...... 18,210,150
342,700 Bristol-Myers Squibb
Company..................... 39,389,081
318,400 Merck & Co., Inc.............. 42,586,000
1,674,800 Pharmacia & Upjohn, Inc....... 77,250,150
1,350,900 Warner-Lambert Company........ 93,718,687
--------------
348,433,205
--------------
INDUSTRIAL MATERIALS -- 4.4%
181,100 Aluminum Company of America... 11,941,281
112,500 BetzDearborn, Inc............. 4,746,093
154,700 BOC Group PLC-Sponsored ADR... 4,196,237
394,200 Calgon Carbon Corporation..... 3,917,362
*422,400 du Pont (E.I.) de Nemours &
Co.......................... 31,521,600
105,000 Eastman Chemical Co........... 6,536,250
*125,800 Georgia-Pacific (Timber
Group)...................... 2,901,262
159,700 Georgia-Pacific Corporation... 9,412,318
75,700 Imperial Chemical ADR......... 4,882,650
321,000 International Paper Company... 13,803,000
268,750 RPM, Inc...................... 4,568,750
315,300 Temple-Inland, Inc............ 16,986,787
127,100 Witco Chemical Corp........... 3,717,675
--------------
119,131,265
--------------
INSURANCE--PROPERTY & CASUALTY -- 0.9%
323,800 Exel Limited.................. 25,195,687
--------------
MANUFACTURING -- 1.8%
203,500 Deere & Company............... 10,760,062
169,100 Eaton Corporation............. 13,147,525
306,800 Minnesota Mining &
Manufacturing Company....... 25,215,125
--------------
49,122,712
--------------
MEDIA & SERVICES -- 1.7%
93,200 Cognizant Corp................ 5,871,600
562,700 Gannett Co., Inc.............. 39,986,868
--------------
45,858,468
--------------
REAL ESTATE -- 3.0%
277,200 Kimco Realty Corporation
(REIT)...................... 11,365,200
390,400 Liberty Property Trust
(REIT)...................... 9,979,600
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-24
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
REAL ESTATE -- (CONTINUED)
235,100 Nationwide Health Properties,
Inc. (REIT)................. $ 5,613,012
488,800 Security Capital Pacific
Trust....................... 10,998,000
527,400 Spieker Properties, Inc....... 20,436,750
427,100 Starwood Hotels & Resorts
(REIT)...................... 20,634,268
122,800 Sunstone Hotel Investors, Inc.
(REIT)...................... 1,634,775
--------------
80,661,605
--------------
RETAIL -- 4.1%
438,100 American Greetings
Corporation................. 22,315,718
408,900 J.C. Penney Company, Inc...... 29,568,581
877,300 May Department Stores Company
(The)....................... 57,463,150
--------------
109,347,449
--------------
SOFTWARE & SERVICES -- 0.2%
49,500 Microsoft Corporation......... 4,702,500
--------------
UTILITIES -- 17.3%
204,900 AT&T Corp..................... 11,704,912
656,100 Ameritech Corporation......... 29,442,487
889,346 Bell Atlantic Corporation..... 40,576,411
711,500 BellSouth Corporation......... 47,759,437
245,600 CINergy Corp.................. 8,596,000
222,600 Columbia Gas System, Inc.
(The)....................... 12,382,125
534,000 Duke Energy Corporation....... 31,639,500
546,600 El Paso Natural Gas Company... 20,907,450
492,200 Endesa SA..................... 10,643,825
692,500 GPU, Inc...................... 26,185,156
*541,400 MCN Energy Group Inc.......... 13,467,325
330,700 Montana Power Company......... 11,491,825
480,300 National Power PLC-Sponsored
ADR......................... 17,711,062
291,800 New England Electric System... 12,620,350
664,800 NIPSCO Industries Inc......... 18,614,400
525,200 Northern States Power
Company..................... 15,033,850
255,900 PowerGen PLC Sponsored ADR.... 14,426,362
1,015,400 SBC Communications Inc........ 40,616,000
726,400 Southern Company (The)........ 20,112,200
420,200 Sprint Corporation............ 29,624,100
324,000 Texas Utilities Company....... 13,486,500
*328,781 WorldCom, Inc................. 15,925,329
--------------
462,966,606
--------------
WASTE MANAGEMENT -- 0.4%
*215,900 Waste Management, Inc......... 7,556,500
--------------
Total common stocks........... $2,587,718,286
--------------
--------------
CONVERTIBLE PREFERRED STOCKS -- 2.0%
AEROSPACE & DEFENSE -- 1.0%
58,900 Loral Space & Communications,
Ltd.
Cv Pfd...................... $ 4,454,312
283,600 Loral Space & Communications,
Ltd......................... 21,447,250
--------------
25,901,562
--------------
MEDIA & SERVICES -- 1.0%
336,600 American Radio Systems
Corporation**............... 26,591,400
--------------
Total convertible preferred
stocks...................... $ 52,492,962
--------------
--------------
WARRANTS -- 0.0%
*18,794 Security Capital Group........ $ 6,460
--------------
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 2.3%
REPURCHASE AGREEMENT
$61,082,000 Interest in $1,111,215,000
joint repurchase agreement
with State Street Bank dated
06/30/98 at 5.8%, to be
repurchased at $61,091,841
on 07/01/98; (collateralized
by $421,318,000 U.S.
Treasury Notes 5.75%-7.825%
due 05/15/99-11/15/04,
563,474,000 U.S. Treasury
Bonds 8.00%-11.125% due
02/15/15-08/15/25,
121,000,000 U.S. Treasury
Strips (principal) 0% due
08/15/04-08/15/07 and
5,423,000 U.S. Treasury
Bills 0% due 08/13/98)...... $ 61,082,000
--------------
--------------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $2,113,358,302).... 96.4 % $2,587,718,286
Total convertible preferred stocks
(cost $36,015,463)......................... 2.0 52,492,962
Total warrants (cost $0)..................... 0.0 6,460
Total short-term securities (cost
$61,082,000)............................... 2.3 61,082,000
------ --------------
Total investment in securities (total cost
$2,210,455,765)............................ 100.7 2,701,299,708
Excess of liabilities over cash, receivables
and other assets........................... (0.7) (18,602,980)
------ --------------
Net assets................................... 100.0 % $2,682,696,728
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 1,285,871,318
shares outstanding................................. $ 128,587,132
Capital surplus...................................... 1,948,277,085
Accumulated undistributed net investment income...... 21,897,287
Accumulated undistributed net realized gain on
investments........................................ 93,249,066
Unrealized appreciation of investments............... 490,843,943
Unrealized depreciation of option contracts.......... (147,198)
Unrealized depreciation on translation on other
assets and liabilities in foreign currencies....... (10,587)
--------------
Net assets........................................... $2,682,696,728
--------------
--------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($2,679,882,266 DIVIDED BY
1,283,024,906 shares outstanding).................... $2.09
-----
-----
Class IB
Net asset value per share ($2,814,462 DIVIDED BY
2,846,412 shares outstanding)........................ $0.99
-----
-----
</TABLE>
* Non-income producing during period.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1998,
the market value of these securities amounted to $26,591,400 or 1% of net
assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-25
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
WRITTEN OPTIONS AT JUNE 30, 1998
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF PREMIUM MARKET APPRECIATION
DESCRIPTION CONTRACTS RECEIVED VALUE (DEPRECIATION)
- ------------------------------------------------ ------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
American Home Products July 1998 Strike Price 55 783 $ 49,007 $ 19,575 $ 29,432
Ford Motor Company July 1998 Strike Price 60 271 16,157 32,181 (16,024)
Merck & Co. July 1998 Strike Price 135 318 25,609 79,500 (53,891)
Nabisco Holdings Co. July 1998 Strike Price 40 1,350 77,460 67,500 9,960
Phillip Morris Companies July 1998 Strike Price
42.5 336 18,902 6,300 12,602
Warner-Lambert Company July 1998 Strike Price 70 1,125 93,682 246,094 (152,412)
Warner-Lambert Company July 1998 Strike Price 75 225 16,424 16,875 (451)
Xerox July 1998 Strike Price 115 115 27,386 3,800 23,586
-------------
$(147,198)
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-26
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------------- -------------
<C> <S> <C>
COMMON STOCKS -- 59.4%
ARGENTINA -- 0.2%
15,800 Telefonica de Argentina - ADR........... $ 512,512
-------------
AUSTRALIA -- 2.4%
*114,212 Amp Limited**........................... 1,336,712
164,866 Australia & New Zealand Banking Group
Ltd................................... 1,137,314
155,000 CSR Ltd................................. 447,282
294,669 News Corporation Ltd.................... 2,404,994
512,844 Pasminco Limited........................ 390,620
164,056 WMC Limited............................. 493,733
-------------
6,210,655
-------------
BRAZIL -- 0.5%
1,145,900 Banco Itau SA........................... 648,936
6,449,400 Cia Brasileiro Distribution............. 141,076
2,276,000 Petroleo Brasileiro..................... 423,082
-------------
1,213,094
-------------
CANADA -- 0.1%
9,600 Canadian National Railway Company....... 510,000
-------------
CHILE -- 0.1%
13,200 Cia Telecom Chile ADR................... 268,125
-------------
DENMARK -- 1.4%
11,530 Novov-Nordisk A/S - B Shares............ 1,589,416
21,880 UniDanmark A/S - A Shares (Reg.)........ 1,966,236
-------------
3,555,652
-------------
FINLAND -- 1.3%
95,700 Metsa-Serla - B Shares.................. 924,471
22,870 Nokia OYJ Class A Shares................ 1,681,959
9,600 Nokia Corp. - Sponsored ADR............. 696,600
-------------
3,303,030
-------------
FRANCE -- 10.1%
6,296 AGF-Assurance Generale de France........ 356,244
15,790 Alcatel Alsthom......................... 3,214,918
483 Allianz Bcvg Warrant.................... 2,808
1,727 Assurance Generale**.................... 97,718
19,180 Axa-UAP................................. 2,157,184
35,490 Banque Nationale de Paris**............. 2,899,764
560 Carrefour Supermarche................... 354,282
8,767 Compagnie de Saint Gobain............... 1,625,497
16,890 Elf Aquitaine........................... 2,374,533
39,690 Michelin................................ 2,291,059
32,351 Rhone-Poulenc - A Shares................ 1,824,617
14,657 Societe Generale - A.................... 3,047,264
15,679 Total S.A. - B Shares................... 2,038,312
20,240 Vivendi................................. 4,321,818
-------------
26,606,018
-------------
GERMANY -- 9.1%
3,770 Adidas AG............................... 651,644
99,790 Bayer AG................................ 5,146,966
45,330 Dresdner Bank AG........................ 2,443,504
14,150 Henkel AG............................... 1,407,134
40,860 Hoechst AG.............................. 2,039,566
6,760 Hornbach Holding AG..................... 619,811
3,415 Karstadt AG............................. 1,649,763
4,900 M.A.N. AG............................... 1,905,670
23,100 Mannesmann AG........................... 2,343,230
*21,070 Metallgesellschaft AG................... 431,897
<CAPTION>
SHARES MARKET
- ----------------- VALUE
-------------
<C> <S> <C>
GERMANY -- (CONTINUED)
900 Sap AG.................................. $ 545,973
2,150 Sap AG-Vorzug........................... 1,461,496
26,100 Siemans AG.............................. 1,587,659
27,190 Veba AG................................. 1,852,801
-------------
24,087,114
-------------
HONG KONG -- 0.3%
*138,000 Cheung Kong Holdings Ltd................ 678,550
-------------
INDIA -- 0.6%
548,100 Cervejaria Brahma....................... 339,065
14,543,712 Cia Energetica Minas.................... 450,165
5,949,900 Telecomun Brasileiras SA................ 655,894
-------------
1,445,124
-------------
IRELAND -- 0.3%
237,184 Smurfit (Jefferson) Group............... 714,314
-------------
ITALY -- 1.0%
16,800 Gucci Group NV.......................... 890,400
223,344 Telecom Italia S.p.A.................... 1,644,095
-------------
2,534,495
-------------
JAPAN -- 5.9%
10,900 Advantest Corp.......................... 585,898
28,000 Dai Nippon Printing..................... 446,878
167,000 Daiwa Securities, Inc................... 718,370
37,000 Fuji Machine Manufacturing Company...... 981,085
45,000 Fuji Photo Film Co...................... 1,566,091
68,000 Jusco Co. Ltd........................... 1,246,964
23,000 Kao Corp................................ 354,649
13,000 Mabuchi Motor Co., Ltd.................. 824,296
22,600 Matsumotokiyoshi........................ 794,667
55,000 Matsushita Electric Industrial Co....... 883,740
1,390 Nippon Telegraph & Tel.................. 1,151,781
73,000 Olympus Optical......................... 634,348
*8,000 Rohm Company Limited.................... 821,414
57,000 Sanwa Bank Ltd.......................... 509,687
1,400 Shohkoh Fund............................ 343,985
23,800 Sony Corporation........................ 2,049,284
500 Square Co. Ltd.......................... 13,329
282,000 Toshiba Corporation..................... 1,152,098
12,400 Uni-Charm Corporation................... 459,242
-------------
15,537,806
-------------
MEXICO -- 1.2%
227,600 Coca Cola Femsa SA Series L............. 399,316
201,800 Grupo Financiero Banamex................ 383,329
27,200 Grupo Televisa SA....................... 513,536
204,200 Kimberly-Clark de Mexico SA de CV Class
A..................................... 711,053
22,400 Telefonos de Mexico S.A. - ADR.......... 1,076,600
-------------
3,083,916
-------------
NETHERLANDS -- 4.7%
43,591 ING Groep NV............................ 2,854,320
28,370 Kon KNP NV.............................. 1,802,985
44,100 Philips Electronics NV.................. 3,707,117
14,800 Royal Dutch Petroleum Co................ 811,225
39,600 Unilever NV-CVA......................... 3,141,957
-------------
12,317,604
-------------
NEW ZEALAND -- 0.1%
9,600 Telecom Corp. New Zealand Ltd. ADR...... 314,400
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-27
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES MARKET
- ----------------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
NEW ZEALAND -- (CONTINUED)
35,200 Telecom Corp. New Zealand Ltd........... $ 75,280
-------------
389,680
-------------
NORWAY -- 0.3%
46,000 Saga Petroleum AS Class A Shares........ 707,365
-------------
PHILIPPINES -- 0.1%
309,600 Ayala Land, Inc......................... 89,093
71,500 Manila Electric Company, Class B........ 188,608
-------------
277,701
-------------
SINGAPORE -- 0.2%
230,000 Overseas Union Bank (Foreign Reg)....... 503,704
-------------
SOUTH AFRICA -- 0.0%
3,500 De Beers - Centenary.................... 61,918
-------------
SPAIN -- 2.2%
6,925 Banco Popular Espanol................... 591,671
31,200 Banco Santander S.A..................... 799,921
73,400 Endesa S.A.............................. 1,608,576
20,027 Telefonica de Espana S.A. - ADR......... 2,785,004
-------------
5,785,172
-------------
SWEDEN -- 2.1%
231,160 Nordbanken Holding AB................... 1,695,667
19,160 Pharmacia & Upjohn ADR.................. 881,726
16,200 Sparbanken Sverige AB-A Shares.......... 487,526
80,160 Volvo AB................................ 2,387,225
-------------
5,452,144
-------------
SWITZERLAND -- 3.0%
380 Cie Financ Richemont.................... 497,293
9,400 Credit Suisse Group..................... 2,091,559
2,350 Holderbank Financial Glarus B........... 2,990,155
1,105 Nestle S.A. (Reg)....................... 2,364,717
-------------
7,943,724
-------------
THAILAND -- 0.0%
58,600 Bangkok Bank............................ 72,037
-------------
UNITED KINGDOM -- 12.2%
138,072 Allied Irish Banks PLC.................. 1,996,185
144,700 B.A.T. Industries PLC................... 1,444,971
88,932 Bass PLC................................ 1,661,810
42,850 BOC Group PLC........................... 584,831
168,939 British Petroleum Co. PLC............... 2,459,359
114,400 British Telecom Co. PLC................. 1,407,715
92,175 BTR..................................... 261,834
157,900 Compass Group PLC....................... 1,817,849
20,369 Cookson Group PLC....................... 70,010
149,394 Diageo PLC.............................. 1,778,500
26,300 Granada Group PLC....................... 484,452
114,700 Great Universal Stores.................. 1,512,836
69,400 HSBC Holdings PLC....................... 1,761,227
63,800 Lloyds TSB Group PLC.................... 890,990
66,600 Marks & Spencer PLC..................... 607,838
55,400 Next PLC................................ 476,964
85,672 PowerGen PLC............................ 1,186,434
104,720 Reckitt & Colman PLC.................... 1,998,860
83,169 Royal & Sun Alliance Insurance Group.... 848,559
48,400 Royal Bank of Scotland Group............ 839,049
<CAPTION>
SHARES MARKET
- ----------------- VALUE
-------------
<C> <S> <C>
UNITED KINGDOM -- (CONTINUED)
38,500 Siebe PLC............................... $ 770,205
262,062 SmithKline Beecham...................... 3,189,745
79,100 Standard Chartered PLC.................. 898,113
243,400 WPP Group PLC........................... 1,602,117
32,200 Zeneca Group PLC........................ 1,383,438
-------------
31,933,891
-------------
Total common stocks..................... $ 155,705,345
-------------
-------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------------
<C> <S> <C>
CORPORATE NOTES -- 0.5%
INDUSTRIAL
Sara Lee Corporation
$ 1,400,000 4.75% due 10/22/98.................... $ 1,397,425
-------------
-------------
FOREIGN CORPORATE BONDS -- 0.8%
GERMANY -- 0.4%
Cades
1,950,000 5.12% due 10/25/08.................... $ 1,092,465
-------------
LUXEMBOURG -- 0.1%
Electricite de France
32,000,000 4.75% due 12/05/01.................... 259,340
-------------
UNITED KINGDOM -- 0.3%
Hyder PLC
450,000 8.75% due 07/17/06.................... 832,297
-------------
Total foreign corporate bonds........... $ 2,184,102
-------------
-------------
FOREIGN GOVERNMENT BONDS -- 26.2%
AUSTRALIA -- 2.4%
Australia Commonwealth
4,210,000 9.75% due 08/15/02.................... $ 2,990,787
Australia Commonwealth
3,950,000 10.00% due 10/15/07................... 3,223,400
-------------
6,214,187
-------------
CANADA -- 1.7%
Canada Government
2,870,000 7.00% due 12/01/06.................... 2,166,734
Canada Government
250,000 8.00% due 09/01/27.................... 230,772
Canada Government
2,800,000 7.50% due 03/01/01.................... 2,005,432
-------------
4,402,938
-------------
DENMARK -- 3.4%
Denmark Bullet
46,000,000 9.00% due 11/15/00.................... 7,367,208
Denmark Bullet
3,000,000 7.00% due 12/15/04.................... 488,584
Denmark Kingdom
6,000,000 7.00% due 11/10/24.................... 1,058,569
-------------
8,914,361
-------------
FRANCE -- 0.9%
France O.A.T.
1,600,000 8.50% due 04/25/03.................... 310,815
France O.A.T.
10,000,000 6.00% due 10/25/25.................... 1,797,874
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-28
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------- -------------
<C> <S> <C>
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
FRANCE -- (CONTINUED)
Quebec Province
$ 1,660,000 6.88% due 04/22/04.................... $ 302,702
-------------
2,411,391
-------------
GERMANY -- 5.0%
Deutsche Hypbk Frankfurt
1,500,000 4.50% due 03/23/02.................... 832,089
Deutschland Republic
7,800,000 6.25% due 01/04/24.................... 4,870,046
Deutschland Republic
10,450,000 6.88% due 05/12/05.................... 6,536,771
Republic of Slovenia
1,500,000 5.75% due 06/16/04.................... 856,458
-------------
13,095,364
-------------
ITALY -- 3.5%
Italy BTPS
4,600,000,000 6.00% due 01/01/07.................... 2,775,190
Italy BTPS
10,900,000,000 6.25% due 03/01/02.................... 6,470,523
-------------
9,245,713
-------------
JAPAN -- 1.7%
Italy Republic
240,000,000 5.00% due 02/15/04.................... 2,118,384
Japan Government
110,000,000 6.60% due 09/20/11.................... 1,228,915
Nippon Tel & Tel
108,000,000 2.50% due 07/25/07.................... 821,954
Republic of Austria
50,000,000 6.25% due 10/16/03.................... 454,389
-------------
4,623,642
-------------
NEW ZEALAND -- 1.3%
New Zealand Government
5,910,000 10.00% due 08/15/02................... 3,370,251
-------------
PORTUGAL -- 0.3%
Portugal Republic
90,000,000 4.50% due 08/15/02.................... 730,761
-------------
SPAIN -- 1.0%
Spanish Government
395,000,000 0.00% due 01/31/03.................... 2,651,394
-------------
SWEDEN -- 0.5%
1034 Sweden
7,500,000 9.00% due 04/20/09.................... 1,251,346
-------------
UNITED KINGDOM -- 4.5%
FFRESH MB 1-A2
580,467 11.13% due 10/05/58................... 1,389,131
Iceland Republic
381,000 8.75% due 05/12/03.................... 681,787
Japan Finance Municipal
590,000 8.38% due 12/07/06.................... 1,093,932
U.K. Treasury Gilt
950,000 8.75% due 08/25/17.................... 2,144,311
U.K. Treasury Gilt
1,200,000 6.75% due 01/26/04.................... 2,070,402
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------- -------------
<C> <S> <C>
UNITED KINGDOM -- (CONTINUED)
U.K. Treasury Gilt
$ 2,350,000 7.75% due 09/08/06.................... $ 4,354,738
-------------
11,734,301
-------------
Total foreign government bonds.......... $ 68,645,649
-------------
-------------
U.S. TREASURY AND FEDERAL AGENCIES -- 0.8%
U.S. TREASURY NOTES -- 0.5%
1,300,000 5.875 due 07/31/99...................... 1,304,469
-------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 0.3%
FNMA Series 1993-1998
216,943 5.25% due 11/25/14.................... $ 216,146
FNMA Global Medium Term Note
820,000 6.50% due 07/10/02.................... 523,011
-------------
739,157
-------------
Total U.S. treasuries and federal
agencies.............................. $ 2,043,626
-------------
-------------
SHORT-TERM SECURITIES -- 12.5%
CERTIFICATE OF DEPOSIT -- 3.3%
Bank of Nova Scotia-NY
700,000 5.89% due 09/16/98.................... $ 699,916
Bankers Trust Corporation
1,700,000 5.97% due 10/27/98.................... 1,700,378
Canadian Imperial Bank-NY
1,700,000 5.74% due 08/31/99.................... 1,699,269
Canadian Imperial Bank of Commerce
1,500,000 5.55% due 12/10/99.................... 1,498,911
Credit Agricole USA
1,500,000 5.70% due 03/02/99.................... 1,499,615
Deutsche Bank NY
1,500,000 5.70% due 04/06/99.................... 1,499,450
-------------
8,597,539
-------------
NON CONVERTIBLE-CORPORATE NOTES -- 0.3%
Westpac Capital Corporation
750,000 6.00% due 12/11/98.................... 750,000
REPURCHASE AGREEMENT -- 8.9%
23,335,000 Interest in $1,111,215,000 joint
repurchase agreement with State Street
Bank dated 06/30/98 at 5.80%, to be
repurchased at $23,338,760 on July 1,
1998; (collateralized by $421,318,000
U.S. Treasury Notes 5.75%-7.825% due
05/15/99-11/15/04, 563,474,000 U.S.
Treasury Bonds 8.00%-11.25% due
02/15/15-8/15/25, 121,000,000 U.S.
Treasury Strips (principal) 0% due
08/15/04-08/15/07 and 5,423,000 U.S.
Treasury Bills 0% due 08/13/98)....... 23,335,000
-------------
Total short-term securities............. $ 32,682,539
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-29
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $138,965,741)...... 59.4% $ 155,705,345
Total corporate bonds and notes (cost
$1,394,964)................................ 0.5 1,397,425
Total foreign corporate bonds (cost
$2,232,419)................................ 0.8 2,184,102
Total foreign government bonds (cost
$68,047,610)............................... 26.2 68,645,649
Total U.S. treasuries & federal agencies
(cost $2,130,147).......................... 0.8 2,043,626
Total short-term securities (cost
$32,682,539)............................... 12.5 32,682,539
------ --------------
Total investment in securities (total cost
$245,453,420).............................. 100.2 262,658,686
Excess of liabilities over cash, receivables
and other assets........................... (0.2) (537,658)
------ --------------
Net assets (applicable to $1.15 per share
based on 228,360,278 shares outstanding)... 100.0% $ 262,121,028
------ --------------
------ --------------
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 750,000,000
shares authorized; 228,360,278 shares
outstanding........................................ $ 22,836,028
Capital surplus...................................... 237,378,401
Distribution in excess of net investment income...... (19,561,099)
Accumulated undistributed net realized gain on
investments........................................ 3,907,458
Unrealized appreciation of investments............... 17,205,266
Unrealized depreciation of futures contracts***...... (95,111)
Unrealized appreciation on forward foreign currency
contracts (note 2)................................. 563,794
Unrealized depreciation on translation of other
assets and liabilities in forward foreign
currencies......................................... (113,709)
--------------
Net assets, applicable to shares outstanding......... $ 262,121,028
--------------
--------------
</TABLE>
* Non-income producing during period.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1998,
the market value of these securities amounted to $4,334,194 or 1.6% of net
assets.
*** The Fund had 8 September TSE 10 year JGB Index futures contracts open at
June 30, 1998. These contracts had a market value of $95,111 at June 30,
1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-30
<PAGE>
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 1998
<TABLE>
<CAPTION>
UNREALIZED
TOTAL AGGREGATE DELIVERY APPRECIATION
DESCRIPTION MARKET VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Australian Dollar (Sell) $3,759,138 $3,784,005 08/31/98 $ 24,867
Australian Dollar (Sell) 2,975,468 2,825,365 08/31/98 (150,103)
British Pounds (Buy) 189,429 189,764 09/01/98 336
British Pounds (Sell) 1,513,312 1,499,521 08/18/98 (13,791)
British Pounds (Sell) 1,496,682 1,503,000 08/18/98 6,318
British Pounds (Sell) 12,179,924 11,947,900 08/18/98 (232,024)
British Pounds (Sell) 199,398 197,664 09/01/98 (1,734)
British Pounds (Sell) 372,211 363,328 09/01/98 (8,883)
Canadian Dollar (Buy) 1,691,217 1,707,107 08/04/98 (15,891)
Canadian Dollar (Buy) 1,760,933 1,776,325 08/31/98 (15,392)
Canadian Dollar (Buy) 947,670 958,592 08/31/98 (10,922)
Canadian Dollar (Buy) 251,075 253,269 08/31/98 (2,195)
Canadian Dollar (Sell) 5,352,391 5,410,345 08/31/98 57,953
Canadian Dollar (Sell) 2,013,372 2,010,218 08/31/98 (3,154)
Danish Krone (Sell) 2,389,896 2,442,708 08/31/98 52,812
French Franc (Sell) 2,387,167 2,442,881 09/01/98 55,714
French Franc (Sell) 7,939,896 7,901,049 01/04/99 (38,847)
German Deutschemark (Buy) 753,212 760,201 07/20/98 (6,989)
German Deutschemark (Buy) 6,516,305 6,639,648 09/11/98 (123,343)
German Deutschemark (Buy) 2,166,334 2,211,517 08/31/98 (45,183)
German Deutschemark (Buy) 273,874 279,004 09/11/98 (5,130)
German Deutschemark (Buy) 2,705,419 2,728,230 08/31/98 (22,811)
German Deutschemark (Buy) 7,943,873 7,903,665 01/04/99 40,208
German Deutschemark (Sell) 470,758 476,377 07/20/98 5,620
German Deutschemark (Sell) 282,455 287,324 07/20/98 4,869
German Deutschemark (Sell) 1,240,585 1,262,875 07/20/98 22,291
German Deutschemark (Sell) 825,210 838,723 07/20/98 13,513
German Deutschemark (Sell) 1,604,370 1,634,463 08/12/98 30,093
German Deutschemark (Sell) 3,850,377 3,929,481 08/12/98 79,104
German Deutschemark (Sell) 1,078,638 1,089,026 08/12/98 10,388
German Deutschemark (Sell) 2,771,305 2,790,253 08/20/98 18,948
German Deutschemark (Sell) 18,394,404 18,828,102 08/31/98 433,699
German Deutschemark (Sell) 494,115 502,116 08/31/98 8,001
German Deutschemark (Sell) 227,626 226,952 08/31/98 (674)
German Deutschemark (Sell) 1,388,812 1,397,280 09/11/98 8,469
Italian Lira (Sell) 6,442,441 6,578,471 08/31/98 136,030
Japanese Yen (Sell) 4,464,013 4,515,660 08/31/98 51,647
New Zealand Dollar (Buy) 1,764,160 1,860,480 09/18/98 (96,320)
New Zealand Dollar (Buy) 799,546 793,135 09/18/98 6,411
New Zealand Dollar (Buy) 1,989,896 2,140,602 09/28/98 (150,706)
Spanish Pesetas (Sell) 2,639,787 2,697,764 08/31/98 57,977
Swedish Krona (Buy) 1,217,439 1,260,635 07/20/98 (43,196)
Swedish Krona (Buy) 811,125 837,367 07/20/98 (26,242)
Swedish Krona (Sell) 1,233,638 1,276,963 08/31/98 43,325
Swiss Franc (Buy) 1,379,859 1,402,203 09/11/98 (22,344)
Swiss Franc (Sell) 6,325,461 6,739,468 09/11/98 414,007
Swiss Franc (Sell) 265,927 282,996 09/11/98 17,069
-------------
$ 563,794
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-31
<PAGE>
HARTFORD SMALL COMPANY HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- -------------
<C> <S> <C>
COMMON STOCKS -- 92.3%
BUSINESS SERVICES -- 5.0%
*55,845 Aztec Technology Partners............... $ 425,819
*103,400 Getty Images, Inc....................... 2,300,650
*25,800 Iron Mountain, Inc...................... 1,154,550
*199,223 Navigant International Inc.............. 1,693,392
1 School Specialty Inc.................... 17
95,000 Select Appointments Holdings-ADR........ 2,802,500
*69,807 U.S. Office Products Company............ 1,361,226
*37,230 Workflow Management Inc................. 300,167
*135,700 Young & Rubicam Inc..................... 4,342,400
-------------
14,380,721
-------------
COMMUNICATIONS EQUIPMENT -- 4.5%
*48,400 Cellstar Corporation.................... 626,175
137,000 ECI Telecommunications.................. 5,188,875
*215,500 Innova Corp. Wash....................... 1,104,437
*130,000 RCN Corporation......................... 2,518,750
*131,300 Transwitch Corp......................... 1,805,375
*47,600 Verisign Inc............................ 1,779,050
-------------
13,022,662
-------------
COMPUTER & OFFICE EQUIPMENT -- 3.0%
*106,600 Seagate Technology, Inc................. 2,524,125
100,950 Symbol Technologies, Inc................ 3,810,862
*50,000 Synopsis, Inc........................... 2,287,500
-------------
8,622,487
-------------
CONSUMER NON-DURABLES -- 1.5%
279,000 Stride Rite Corp. (The)................. 4,202,437
-------------
CONSUMER SERVICES -- 2.5%
*100,000 SFX Entertainment Inc. Class A.......... 4,587,500
*114,300 Cheesecake Factory, Inc. (The).......... 2,586,037
-------------
7,173,537
-------------
ELECTRONICS -- 6.0%
*358,600 Cypress Semiconductor Corporation....... 2,980,862
*142,300 Jabil Circuit, Inc...................... 4,704,793
*675,000 Rogers Communications, Inc.............. 6,075,000
*94,700 SCI Systems, Inc........................ 3,563,087
-------------
17,323,742
-------------
ENERGY & SERVICES -- 3.8%
50,100 Coflexip ADR............................ 3,062,362
*78,000 J Ray McDermott SA...................... 3,237,000
*160,000 Marine Drilling Companies, Inc.......... 2,560,000
80,000 Pogo Producing Company.................. 2,010,000
-------------
10,869,362
-------------
FINANCIAL SERVICES -- 13.1%
62,400 Finova Group Inc. (The)................. 3,533,400
*133,200 FIRSTPLUS Financial Group, Inc.......... 4,795,200
*132,500 Golden State Bancorp, Inc............... 3,941,875
*100,000 Heller Financial, Inc................... 3,000,000
*248,100 Imperial Credit Industries, Inc......... 5,830,350
81,800 Jefferies Group Inc..................... 3,353,800
75,000 Legg Mason, Inc......................... 4,317,187
53,000 Long Island Bancorp, Inc................ 3,219,750
66,250 Reinsurance Group of America, Inc....... 3,917,031
<CAPTION>
SHARES MARKET
- ----------- VALUE
-------------
<C> <S> <C>
FINANCIAL SERVICES -- (CONTINUED)
204,200 Rock Financial Corporation.............. $ 2,093,050
-------------
38,001,643
-------------
HEALTH CARE -- 10.8%
*62,000 Agouron Pharmaceuticals, Inc............ 1,879,375
119,000 Allergan, Inc........................... 5,518,625
*142,000 Genzyme Corporation..................... 3,629,875
*36,600 Gilead Sciences, Inc.................... 1,173,487
109,800 Herbalife International, Inc. Class B... 2,264,625
66,750 ICN Pharmaceuticals, Inc................ 3,049,640
*97,500 IDX Systems Corporation................. 4,491,093
*51,000 LAM Research Corporation................ 975,375
*179,400 Magellan Health Services, Inc........... 4,552,275
89,100 Pharmacia & Upjohn, Inc................. 4,109,737
-------------
31,644,107
-------------
INDUSTRIAL MATERIALS -- 0.8%
100,000 Titanium Metals Corporation............. 2,206,250
-------------
MANUFACTURING -- 2.5%
*157,000 Cognex Corporation...................... 2,904,500
*196,000 Covance, Inc............................ 4,410,000
-------------
7,314,500
-------------
MEDIA & SERVICES -- 10.2%
*257,500 ADC Telecommunications, Inc............. 9,406,796
*218,000 American Tower Corp. A.................. 5,436,375
*170,000 Broderbund Software..................... 4,861,687
*148,000 Hearst-Argyle Television Inc............ 5,920,000
*107,000 Lamar Advertising Company............... 3,838,625
-------------
29,463,483
-------------
RETAIL -- 3.8%
*215,000 CompUSA, Inc............................ 3,883,437
29,200 Ethan Allen, Inc........................ 1,458,175
*100,600 Gadzooks Inc............................ 2,772,787
*50,000 Whole Food Market....................... 3,025,000
-------------
11,139,399
-------------
SOFTWARE & SERVICES -- 19.2%
*347,100 Activision Inc.......................... 3,579,468
*4,200 Acxiom Corp............................. 104,737
*14,300 Answerthink Consulting Group............ 307,450
170,000 Broderbund Software..................... 3,878,125
*175,000 Check Point Software Tech............... 5,731,250
52,000 Comverse Technology, Inc................ 2,697,500
*60,000 Inktomi Corp............................ 2,385,000
*60,000 J.D. Edwards & Co....................... 2,576,250
*332,500 Learning Company, Inc. (The)............ 9,850,312
*67,700 Mobius Management Systems, Inc.......... 1,015,500
*208,000 Peerless Systems Corporation............ 4,316,000
*180,000 Pegasystems, Inc........................ 4,882,500
*42,000 PeopleSoft, Inc......................... 1,974,000
*152,400 Policy Management Systems Corp.......... 5,981,700
*146,000 Safeguard Scientifics, Inc.............. 6,086,375
*42,900 Transition Systems, Inc................. 455,812
-------------
55,821,979
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-32
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TRANSPORTATION -- 4.1%
*209,000 Atlas Air Inc........................... $ 7,066,812
73,600 Robinson (C.H.) Worldwide, Inc.......... 1,830,800
147,300 Swift Transportation.................... 2,918,381
-------------
11,815,993
-------------
UTILITIES -- 1.5%
*298,500 CulturalAccessWorldwide, Inc............ 2,910,375
*35,000 Snyder Communications................... 1,540,000
-------------
4,450,375
-------------
Total common stocks..................... $267,452,677
-------------
-------------
CONVERTIBLE PREFERRED STOCKS -- 0.1%
CONSUMER SERVICES
*58,060 SGW Holdings Corporation**.............. $ 366,631
-------------
-------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 6.8%
REPURCHASE AGREEMENT
$19,647,000 Interest in $1,111,215,000 joint
repurchase agreement with State Street
Bank dated 06/30/98 at 5.8%, to be
repurchased at $19,650,165 on
07/01/98; (collateralized by
$421,318,000 U.S. Treasury Notes
5.75%-7.825% due 05/15/99-11/15/04,
563,474,000 U.S. Treasury Bonds
8.00%-11.125% due 02/15/15-08/15/25,
121,000,000 U.S. Treasury Strips
(principal) 0% due 08/15/04-8/15/07
and 5,423,000 U.S. Treasury Bills 0%
due 08/13/98)......................... $ 19,647,000
-------------
-------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $244,623,153)...... 92.3% $ 267,452,677
Total convertible preferred stocks (cost
$599,992).................................. 0.1 366,631
Total short-term securities (cost
$19,647,000)............................... 6.8 19,647,000
------ --------------
Total investment in securities
(Total cost $264,870,145).................. 99.2 287,466,308
Excess of cash, receivables and other assets
over liabilities........................... 0.8 2,327,836
------ --------------
Net assets................................... 100.0% $ 289,794,144
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 750,000,000
shares authorized; 224,924,207 shares
outstanding........................................ $ 22,492,421
Capital surplus...................................... 247,034,320
Distribution in excess of net investment income...... (255,945)
Accumulated net realized loss on investments......... (2,072,815)
Unrealized appreciation of investments............... 22,596,163
--------------
Net assets........................................... $289,794,144
--------------
--------------
Class IA
Net asset value per share ($289,545,195 DIVIDED BY
224,665,861 shares outstanding).................... $1.29
----
----
Class IB
Net asset value per share ($248,949 DIVIDED BY
258,346 shares outstanding)........................ $0.96
----
----
</TABLE>
* Non-income producing during period.
** Restricted security (see Note 2)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-33
<PAGE>
HARTFORD MIDCAP HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- ------------
<C> <S> <C>
COMMON STOCKS -- 97.3%
AEROSPACE & DEFENSE -- 1.6%
*46,055 Loral Space & Communications Ltd........ $ 1,301,053
------------
BUSINESS SERVICES -- 2.8%
*17,000 Iron Mountain, Inc...................... 760,750
14,500 Select Appointments Hldg-ADR............ 427,750
*36,700 Young & Rubicam Inc..................... 1,174,400
------------
2,362,900
------------
COMMUNICATION EQUIPMENT -- 2.7%
*8,310 Ciena Corporation....................... 578,583
28,002 General Cable Corporation............... 808,557
*12,300 Tellabs, Inc............................ 880,987
------------
2,268,127
------------
COMPUTERS & OFFICE EQUIPMENT -- 2.5%
*29,850 EMC Corporation......................... 1,337,653
*20,725 Xilinx, Inc............................. 704,650
------------
2,042,303
------------
CONSUMER DURABLES -- 4.4%
*44,100 Avis Rent a Car Inc..................... 1,091,475
37,330 Hertz Corporation (The)................. 1,654,185
*40,900 Unova, Inc.............................. 879,350
------------
3,625,010
------------
CONSUMER NON-DURABLES -- 2.9%
5,000 Black & Decker Corporation (The)........ 305,000
38,800 Leggett & Platt......................... 970,000
*39,995 Polo Ralph Lauren Corporation........... 1,119,860
------------
2,394,860
------------
CONSUMER SERVICES -- 6.6%
37,000 Galileo International, Inc.............. 1,667,312
*45,285 Mirage Resorts, Inc..................... 965,136
*18,300 SFX Entertainment Inc.-Class A.......... 839,512
29,700 ServiceMaster Company (The)............. 1,130,456
*16,705 Starbucks Corporation................... 892,673
------------
5,495,089
------------
ELECTRONICS -- 4.4%
*75,760 Analog Devices, Inc..................... 1,860,855
*22,330 Solectron Corporation................... 939,255
20,300 York International Corp................. 884,318
------------
3,684,428
------------
ENERGY & SERVICES -- 2.5%
17,345 Coflexip ADR............................ 1,060,213
*12,040 Western Atlas, Inc...................... 1,021,895
------------
2,082,108
------------
FINANCIAL SERVICES -- 17.7%
30,000 Ace Ltd................................. 1,170,000
20,500 City National Corporation............... 757,218
24,005 Equifax, Inc............................ 871,681
15,430 Finova Group, Inc. (The)................ 873,723
20,400 Franklin Resources, Inc................. 1,101,600
*38,500 Heller Financial, Inc................... 1,155,000
<CAPTION>
SHARES MARKET
- ---------- VALUE
------------
<C> <S> <C>
FINANCIAL SERVICES -- (CONTINUED)
27,896 Legg Mason, Inc......................... $ 1,605,763
12,015 Mercantile Bancorporation, Inc.......... 605,255
28,760 Nationwide Financial Services, Inc...... 1,466,760
10,465 Northern Trust Corporation.............. 797,956
17,231 Old Kent Financial Corporation.......... 619,759
22,705 State Street Corporation................ 1,577,997
30,330 T. Rowe Price Associates, Inc........... 1,139,270
18,000 Unum Corporation........................ 999,000
------------
14,740,982
------------
FOOD, BEVERAGE & TOBACCO -- 1.2%
24,970 Coca-Cola Enterprises, Inc.............. 980,072
------------
HEALTH CARE -- 6.7%
31,435 Biomet, Inc............................. 1,039,319
*23,200 Human Genome Sciences, Inc.............. 827,950
28,865 Service Corporation International....... 1,237,586
*35,300 Sunrise Assisted Living, Inc............ 1,213,437
*39,130 Tenet Healthcare Corporation............ 1,222,812
------------
5,541,104
------------
INDUSTRIAL MATERIALS -- 0.3%
*7,000 Sealed Air.............................. 257,250
------------
MANUFACTURING -- 6.5%
16,445 Avery Dennison Corporation.............. 883,918
*52,610 Covance Inc............................. 1,183,725
22,520 Danaher Corporation..................... 826,202
22,310 Dover Corporation....................... 764,117
28,275 Perkin-Elmer Corporation (The).......... 1,758,351
------------
5,416,313
------------
MEDIA & SERVICES -- 12.5%
*44,000 ADC Telecommunications, Inc............. 1,607,375
*47,900 Amer. Tower Corp.-Cl A.................. 1,194,506
*6,940 Clear Channel Communications, Inc....... 757,327
14,800 Cognizant Corporation................... 932,400
*32,400 Intermedia Communications, Inc.......... 1,358,775
*30,800 Lamar Advertising Company............... 1,104,950
*63,412 Outdoor Systems, Inc.................... 1,775,536
11,00 Scripps EW Co........................... 602,937
38,230 Stewart Enterprises, Inc................ 1,017,873
------------
10,351,679
------------
RETAIL -- 8.9%
21,000 American Greetings Corporation.......... 1,069,687
*47,020 Borders Group, Inc...................... 1,739,740
33,110 CVS Corporation......................... 1,289,220
*23,300 Consolidated Stores Corp................ 844,625
*23,800 Papa John's International, Inc.......... 938,612
*51,750 Staples, Inc,........................... 1,497,515
------------
7,379,399
------------
SOFTWARE & SERVICES -- 11.7%
*11,320 America Online, Inc..................... 1,199,920
*16,900 BMC Software, Inc....................... 877,743
*31,800 Bisys Group, Inc. (The)................. 1,303,800
*18,355 Ceridian Corporation.................... 1,078,356
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MF-34
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- ---------- VALUE
------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- (CONTINUED)
*20,470 Computer Sciences Corporation........... $ 1,310,080
*14,400 DST Systems, Inc........................ 806,400
*7,000 Intuit, Inc............................. 428,750
*23,180 PeopleSoft, Inc......................... 1,089,460
*30,200 Policy Management Systems Corporation... 1,185,350
*3,000 Yahoo................................... 472,500
------------
9,752,359
------------
TRANSPORTATION -- 1.4%
27,613 Southwest Airlines Co................... 818,020
*24,100 Virgin Express Holdings ADR............. 311,793
------------
1,129,813
------------
Total common stocks..................... $ 80,804,849
------------
------------
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 3.7%
REPURCHASE AGREEMENT
$3,112,000 Interest in $1,111,215,000 joint
repurchase agreement with State Street
Bank dated 06/30/98 at 5.8%, to be
repurchased at $3,112,501 on 07/01/98;
(collateralized by $421,318,000 U.S.
Treasury Notes 5.75%-7.825% due
05/15/99-11/15/04, 563,474,000 U.S.
Treasury Bonds 8.00%-11.125% due
02/15/15-08/15/25, 121,000,000 U.S.
Treasury Strips (principal) 0% due
08/15/04-8/15/07 and 5,423,000 U.S.
Treasury Bills 0% due 08/13/98)....... $ 3,112,000
------------
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $72,294,615)....... 97.3% $80,804,849
Total short-term securities (cost
$3,112,000)................................ 3.7 3,112,000
------ -----------
Total investment in securities (total cost
$75,406,615)............................... 101.0 83,916,849
Excess of liabilities over cash, receivables
and other assets........................... (1.0) (844,810)
------ -----------
Net assets (applicable to $1.34 per share
based on 62,094,060 shares outstanding).... 100.0% $83,072,039
------ -----------
------ -----------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; 750,000,000
shares authorized; 62,094,060 shares outstanding... $6,209,406
Capital surplus...................................... 67,006,252
Distribution in excess of net investment income...... (54,455)
Accumulated undistributed net realized gain on
investments........................................ 1,400,602
Unrealized appreciation of investments............... 8,510,234
-----------
Net assets, applicable to shares outstanding......... $83,072,039
-----------
-----------
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MF-35
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES MARKET
- -------- VALUE
----------
<C> <S> <C>
COMMON STOCKS -- 93.6%
AEROSPACE & DEFENSE -- 5.2%
500 Lockheed Martin Corporation... $ 52,937
100 Northrop Grumman
Corporation................. 10,312
700 Textron, Inc.................. 50,181
800 United Technologies
Corporation................. 74,000
600 York International
Corporation................. 26,137
----------
213,567
----------
BUSINESS SERVICES -- 0.9%
700 Fluor Corporation............. 35,700
----------
COMMUNICATIONS EQUIPMENT --
3.1%
*700 Cisco Systems, Inc............ 64,443
500 Lucent Technologies, Inc...... 41,593
*300 Tellabs, Inc.................. 21,487
----------
127,523
----------
COMPUTERS & OFFICE EQUIPMENT -- 3.1%
*300 Dell Computer Corporation..... 27,843
*700 EMC Corporation............... 31,368
*200 Gateway 2000, Inc............. 10,125
500 International Business
Machines Corporation........ 57,406
----------
126,742
----------
CONSUMER DURABLES -- 1.8%
1,000 Ford Motor Company............ 59,000
400 ITT Industries, Inc........... 14,950
----------
73,950
----------
CONSUMER NON-DURABLES -- 2.8%
600 Leggett & Platt............... 15,000
1,100 Procter & Gamble Company
(The)....................... 100,168
----------
115,168
----------
ELECTRONICS -- 3.3%
*1,100 Analog Devices, Inc........... 27,018
800 General Electric Company...... 72,800
500 Intel Corporation............. 37,062
----------
136,880
----------
ENERGY & SERVICES -- 5.6%
700 Ashland, Inc.................. 36,137
400 Exxon Corporation............. 28,525
*800 Friede Goldman International,
Inc......................... 23,100
800 Helmerich & Payne, Inc........ 17,800
700 Royal Dutch Petroleum Co...... 38,368
1,600 Sun Company, Inc.............. 62,100
600 Transocean Offshore, Inc...... 26,700
----------
232,730
----------
FINANCIAL SERVICES -- 16.1%
700 Chase Manhattan Corporation
(The)....................... 52,850
500 Citicorp...................... 74,625
900 Federal Home Loan Mortgage
Corporation................. 42,356
1,200 Federal National Mortgage
Association................. 72,900
800 First Chicago NBD
Corporation................. 70,900
1,300 First Union Corporation....... 75,725
<CAPTION>
SHARES MARKET
- -------- VALUE
----------
<C> <S> <C>
FINANCIAL SERVICES --
(CONTINUED)
500 Franklin Resources, Inc....... $ 27,000
1,050 Marsh & McLennan Companies,
Inc......................... 63,459
300 Merrill Lynch & Co., Inc...... 27,675
300 NAC Re Corp................... 16,012
200 Reinsurance Group of America,
Inc......................... 11,825
1,400 Travelers Group, Inc.......... 84,875
900 U.S. Bancorp.................. 38,700
----------
658,902
----------
FOOD, BEVERAGE & TOBACCO --
6.1%
800 Coca-Cola Company (The)....... 68,400
900 H.J. Heinz Company............ 50,512
700 Interstate Bakeries........... 23,231
1,200 Philip Morris Companies,
Inc......................... 47,250
800 Unilever N.V.-New York
Shares...................... 63,150
----------
252,543
----------
HEALTH CARE -- 14.5%
2,300 Abbott Laboratories........... 94,012
*800 Amgen, Inc.................... 52,300
500 Baxter International, Inc..... 26,906
500 Bergen Brunswig Corporation... 23,187
1,900 Columbia/HCA Healthcare
Corporation................. 55,337
*1,300 Genzyme Corporation........... 33,231
1,100 Johnson & Johnson............. 81,125
300 Life Technologies, Inc........ 9,412
500 Loews Corporation............. 43,562
600 Mallinckrodt, Inc............. 17,812
600 Pfizer, Inc................... 65,212
500 Pharmacia & Upjohn, Inc....... 23,062
*700 Tenet Healthcare
Corporation................. 21,875
700 Warner-Lambert Company........ 48,562
----------
595,595
----------
INDUSTRIAL MATERIALS -- 3.0%
1,100 Air Products and Chemicals,
Inc......................... 44,000
1,200 Engelhard Corporation......... 24,300
500 Georgia-Pacific Corporation... 29,468
500 Temple-Inland, Inc............ 26,937
----------
124,705
----------
MANUFACTURING -- 2.6%
1,100 Deere & Company............... 58,162
400 Dover Corporation............. 13,700
300 Honeywell, Inc................ 25,068
200 Ingersoll-Rand Company........ 8,812
----------
105,742
----------
MEDIA & SERVICES -- 1.5%
*400 360 Communications Company.... 12,800
700 Gannett Co., Inc.............. 49,743
----------
62,543
----------
REAL ESTATE -- 0.7%
600 Starwood Hotels & Resorts..... 28,987
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-36
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- -------- VALUE
----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL -- 7.5%
700 American Greetings
Corporation................. $ 35,680
600 Dayton Hudson Corporation..... 29,100
400 Gap, Inc...................... 24,650
700 Home Depot, Inc. (The)........ 58,143
700 May Department Stores Company
(The)....................... 45,850
700 Rite Aid Corporation.......... 26,293
1,500 Wal-Mart Stores, Inc.......... 91,125
----------
310,841
----------
SOFTWARE & SERVICES -- 6.2%
200 BMC Software, Inc............. 10,387
*500 Bisys Group, Inc. (The)....... 20,500
*600 Computer Sciences
Corporation................. 38,400
*1,600 Microsoft Corporation......... 173,400
*500 Sterling Software, Inc........ 14,781
----------
257,468
----------
TRANSPORTATION -- 0.9%
300 Delta Air Lines, Inc.......... 38,775
----------
UTILITIES -- 8.7%
500 Ameritech Corporation......... 22,437
800 AT&T Corp..................... 45,700
1,400 Bell Atlantic Corporation..... 63,875
900 BellSouth Corporation......... 60,412
500 Duke Energy Corporation....... 29,625
600 GPU, Inc...................... 22,687
600 NIPSCO Industries Inc......... 28,000
1,700 SBC Communications Inc........ 68,000
*400 WorldCom, Inc................. 19,375
----------
360,111
----------
Total common stocks........... $3,858,472
----------
----------
<CAPTION>
PRINCIPAL MARKET
AMOUNTS VALUE
- -------- ----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 6.9%
REPURCHASE AGREEMENT
$286,000 Interest in $1,111,215,000
joint repurchase agreement
with State Street Bank dated
06/30/98 at 5.8%, to be
repurchased at $286,046 on
July 1 1998; (collateralized
by $421,318,000 U.S.
Treasury Notes 5.75%-7.825%
due 05/15/99-11/15/04,
563,474,000 U.S. Treasury
Bonds 8.00%-11.125% due
02/15/15-08/15/25,
121,000,000 U.S. Treasury
Strips (principal) 0% due
08/15/04-08/15/07 and
5,423,000 U.S. Treasury
Bills 0% due 08/13/98)...... $ 286,000
----------
----------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $3,716,682)........ 93.6% $ 3,858,472
Total short-term securities (cost
$286,000).................................. 6.9 286,000
------ --------------
Total investment in securities (identified
cost $4,002,682)........................... 100.5 4,144,472
Excess of liabilities over cash, receivables
and other assets........................... (0.5) (20,037)
------ --------------
Net assets................................... 100.0% $ 4,124,435
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 3,963,344 shares
outstanding........................................ $ 3,963
Capital surplus...................................... 3,973,812
Accumulated undistributed net investment income...... 4,686
Accumulated undistributed net realized gain on
investments........................................ 184
Unrealized appreciation of investments............... 141,790
--------------
Net assets........................................... $ 4,124,435
--------------
--------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($4,114,031 DIVIDED BY
3,963,344 shares outstanding)........................ $1.04
-----
-----
Class IB
Net asset value per share ($10,404 DIVIDED BY 10,000
shares outstanding).................................. $1.04
-----
-----
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-37
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD HARTFORD HARTFORD
BOND STOCK MONEY MARKET ADVISERS
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 42,643 $ 28,738,177 $ -- $ 32,586,326
Interest............... 20,240,938 8,542,816 17,380,996 104,841,974
Less: foreign tax
withheld............. -- (342,374) -- (290,313)
-------------- --------------- -------------- ---------------
Total investment
income............. 20,283,580 36,938,619 17,380,996 137,137,987
-------------- --------------- -------------- ---------------
EXPENSES:
Investment advisory
fees................. 942,060 6,977,733 761,926 19,967,276
Administrative services
fees................. 540,325 4,732,546 533,348 8,043,152
Accounting services.... 13,460 125,826 18,294 223,738
Custodian fees......... 3,966 13,477 2,682 23,217
Board of directors
fees................. 2,259 21,047 3,032 37,241
Distribution fees --
Class IB............. 208 338 55 1,194
Other expenses......... 33,428 190,123 27,773 373,003
-------------- --------------- -------------- ---------------
Total expenses....... 1,535,886 12,061,091 1,347,111 28,668,821
-------------- --------------- -------------- ---------------
Net investment income
(loss)............... 18,747,694 24,877,528 16,033,885 108,469,166
-------------- --------------- -------------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... 5,675,305 255,925,712 6,682 366,321,780
Net realized gain on
futures contracts.... -- -- -- --
Net realized gain
(loss) on forward
foreign currency
contracts............ -- -- -- --
Net realized gain
(loss) on option
contracts............ -- -- -- --
Net realized gain
(loss) on foreign
currency
transactions......... -- 50 -- (24,608)
Net unrealized
appreciation
(depreciation) of
investments.......... 1,580,103 761,083,041 -- 844,715,498
Net unrealized
appreciation
(depreciation) of
futures contracts.... -- -- -- --
Net unrealized
(depreciation)
appreciation of
forward foreign
currency contracts... -- -- -- --
Net unrealized
(depreciation)
appreciation on
translation of other
assets and
liabilities in
foreign currencies... -- 6,067 -- 33,617
Net unrealized
appreciation of
option contracts..... -- -- -- --
-------------- --------------- -------------- ---------------
Net realized and
unrealized gain on
investments.......... 7,255,408 1,017,014,871 6,682 1,211,046,287
-------------- --------------- -------------- ---------------
Net increase in net
assets resulting from
operations........... $26,003,102 $1,041,892,399 $16,040,567 $1,319,515,453
-------------- --------------- -------------- ---------------
-------------- --------------- -------------- ---------------
* For the period from
inception May 30, 1998
to June 30, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-38
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD
CAPITAL MORTGAGE HARTFORD INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION SECURITIES INDEX OPPORTUNITIES GROWTH ADVISERS
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 25,523,142 $ -- $ 9,766,306 $ 17,050,872 $ 27,985,192 $ 2,352,264
Interest............... 9,795,861 10,918,633 1,242,581 2,825,554 1,829,317 2,805,123
Less: foreign tax
withheld............. (1,041,459) -- (66,129) (1,836,006) (118,240) (288,257)
-------------- -------------- -------------- -------------- -------------- --------------
Total investment
income............. 34,277,543 10,918,633 10,942,758 18,040,420 29,696,270 4,869,130
-------------- -------------- -------------- -------------- -------------- --------------
EXPENSES:
Investment advisory
fees................. 11,630,782 406,513 1,336,745 2,924,303 5,451,464 666,244
Administrative services
fees................. 4,610,479 284,559 1,169,651 1,025,458 2,066,054 202,855
Accounting services.... 137,486 8,455 28,790 34,804 44,551 5,162
Custodian fees......... 26,839 8,207 11,620 352,237 5,730 90,200
Board of directors
fees................. 23,020 1,377 4,838 5,776 7,743 863
Distribution fees --
Class IB............. 330 -- -- 45 526 --
Other expenses......... 209,045 30,903 52,313 81,032 72,450 12,660
-------------- -------------- -------------- -------------- -------------- --------------
Total expenses....... 16,637,980 740,013 2,603,957 4,423,654 7,648,519 977,984
-------------- -------------- -------------- -------------- -------------- --------------
Net investment income
(loss)............... 17,639,563 10,178,620 8,338,801 13,616,766 22,047,750 3,891,146
-------------- -------------- -------------- -------------- -------------- --------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... 178,046,031 1,941,142 4,488,217 29,466,829 93,164,616 3,076,852
Net realized gain on
futures contracts.... -- -- 4,211,673 10,892,980 -- 2,796,052
Net realized gain
(loss) on forward
foreign currency
contracts............ (24,282) -- -- (1,829,203) -- 2,296,687
Net realized gain
(loss) on option
contracts............ -- 72,442 -- (459,970) -- (53,142)
Net realized gain
(loss) on foreign
currency
transactions......... (765,949) -- -- 174,723 110,232 (1,045,986)
Net unrealized
appreciation
(depreciation) of
investments.......... 382,416,096 (1,397,173) 194,094,619 125,772,727 118,466,425 17,856,562
Net unrealized
appreciation
(depreciation) of
futures contracts.... -- -- 87,507 (420,229) -- (339,066)
Net unrealized
(depreciation)
appreciation of
forward foreign
currency contracts... (532,361) -- -- 339,041 -- (1,376,293)
Net unrealized
(depreciation)
appreciation on
translation of other
assets and
liabilities in
foreign currencies... (17,648) -- -- 12,417 (10,587) (186,174)
Net unrealized
appreciation of
option contracts..... -- 12,149 -- -- (147,198) --
-------------- -------------- -------------- -------------- -------------- --------------
Net realized and
unrealized gain on
investments.......... 559,121,887 628,560 202,882,016 163,949,315 211,583,488 23,025,492
-------------- -------------- -------------- -------------- -------------- --------------
Net increase in net
assets resulting from
operations........... $576,761,450 $10,807,180 $211,220,817 $177,566,081 $233,631,238 $26,916,638
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
* For the period from
inception May 30, 1998
to June 30, 1998.
<CAPTION>
HARTFORD
HARTFORD HARTFORD GROWTH AND
SMALL COMPANY MIDCAP INCOME
HLS FUND, INC. HLS FUND, INC. HLS FUND*
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 440,731 $ 107,754 $ 2,399
Interest............... 265,961 53,234 2,777
Less: foreign tax
withheld............. (9,524) (872) --
-------------- -------------- --------------
Total investment
income............. 706,692 160,116 5,176
-------------- -------------- --------------
EXPENSES:
Investment advisory
fees................. 713,624 149,869 --
Administrative services
fees................. 218,146 45,612 489
Accounting services.... 1,786 7,000 --
Custodian fees......... 10,909 4,000 --
Board of directors
fees................. 310 2,000 --
Distribution fees --
Class IB............. 38 -- 1
Other expenses......... 17,870 5,551 --
-------------- -------------- --------------
Total expenses....... 962,682 214,032 490
-------------- -------------- --------------
Net investment income
(loss)............... (255,991) (53,915) 4,686
-------------- -------------- --------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... (1,151,141) 1,523,015 184
Net realized gain on
futures contracts.... -- -- --
Net realized gain
(loss) on forward
foreign currency
contracts............ -- -- --
Net realized gain
(loss) on option
contracts............ -- -- --
Net realized gain
(loss) on foreign
currency
transactions......... -- -- --
Net unrealized
appreciation
(depreciation) of
investments.......... 21,103,671 6,996,523 141,790
Net unrealized
appreciation
(depreciation) of
futures contracts.... -- -- --
Net unrealized
(depreciation)
appreciation of
forward foreign
currency contracts... -- -- --
Net unrealized
(depreciation)
appreciation on
translation of other
assets and
liabilities in
foreign currencies... -- -- --
Net unrealized
appreciation of
option contracts..... -- -- --
-------------- -------------- --------------
Net realized and
unrealized gain on
investments.......... 19,952,531 8,519,538 141,974
-------------- -------------- --------------
Net increase in net
assets resulting from
operations........... $19,696,540 $8,465,623 $146,660
-------------- -------------- --------------
-------------- -------------- --------------
* For the period from
inception May 30, 1998
to June 30, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-39
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD HARTFORD HARTFORD
BOND STOCK MONEY MARKET ADVISERS
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
-------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment
income............... $ 18,747,694 $ 24,877,528 $ 16,033,885 $ 108,469,166
Net realized gain
(loss)............... 5,675,305 255,925,762 6,682 366,297,172
Net unrealized
appreciation
(depreciation) of
investments.......... 1,580,103 761,089,108 -- 844,749,115
-------------- --------------- -------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations........... 26,003,102 1,041,892,399 16,040,567 1,319,515,453
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. (1,500,000) (1,600,000) (16,033,885) (4,799,999)
Class IB............. -- -- -- --
From net realized gain
on investments
Class IA............. -- (173,700,000) (6,682) (297,100,001)
Class IB............. -- -- -- --
-------------- --------------- -------------- ----------------
Total
distributions...... (1,500,000) (175,300,000) (16,040,567) (301,900,000)
-------------- --------------- -------------- ----------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 125,127,802 593,039,877 32,683,154 936,166,883
Class IB............. 1,145,321 2,022,166 387,955 6,161,411
-------------- --------------- -------------- ----------------
Net increase
(decrease) in net
assets resulting
from capital share
transactions....... 126,273,123 595,062,043 33,071,109 942,328,294
-------------- --------------- -------------- ----------------
Total increase in net
assets............. 150,776,225 1,461,654,442 33,071,109 1,959,943,747
NET ASSETS:
Beginning of period.... 552,869,797 4,713,321,561 612,480,218 8,283,911,901
-------------- --------------- -------------- ----------------
End of period.......... $703,646,022 $6,174,976,003 $645,551,327 $10,243,855,648
-------------- --------------- -------------- ----------------
-------------- --------------- -------------- ----------------
* For the period from
inception May 30, 1998
to June 30, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-40
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD
CAPITAL MORTGAGE HARTFORD INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION SECURITIES INDEX OPPORTUNITIES GROWTH ADVISERS
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
--------------- -------------- --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income............... $ 17,639,563 $ 10,178,620 $ 8,338,801 $ 13,616,766 $ 22,047,750 $ 3,891,146
Net realized gain
(loss)............... 177,255,800 2,013,584 8,699,890 38,245,359 93,274,848 7,070,463
Net unrealized
appreciation
(depreciation) of
investments.......... 381,866,087 (1,385,024) 194,182,126 125,703,956 118,308,640 15,955,029
--------------- -------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in net assets
resulting from
operations........... 576,761,450 10,807,180 211,220,817 177,566,081 233,631,238 26,916,638
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. (1,000,000) (2,200,000) (1,000,000) (650,000) (4,100,000) (24,000,000)
Class IB............. -- -- -- -- -- --
From net realized gain
on investments
Class IA............. (320,000,000) -- (29,600,000) (72,215,057) (76,700,000) (5,712,912)
Class IB............. -- -- -- -- -- --
--------------- -------------- --------------- --------------- --------------- --------------
Total
distributions...... (321,000,000) (2,200,000) (30,600,000) (72,865,057) (80,800,000) (29,712,912)
--------------- -------------- --------------- --------------- --------------- --------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 587,700,411 (4,998,550) 242,484,230 58,428,399 532,403,454 57,335,778
Class IB............. 1,844,002 -- -- 283,058 2,808,814 --
--------------- -------------- --------------- --------------- --------------- --------------
Net increase
(decrease) in net
assets resulting
from capital share
transactions....... 589,544,413 (4,998,550) 242,484,230 58,711,457 535,212,268 57,335,778
--------------- -------------- --------------- --------------- --------------- --------------
Total increase in net
assets............. 845,305,863 3,608,630 423,105,047 163,412,481 688,043,506 54,539,504
NET ASSETS:
Beginning of period.... 4,802,992,002 325,701,680 1,123,455,002 1,092,945,600 1,994,653,222 207,581,524
--------------- -------------- --------------- --------------- --------------- --------------
End of period.......... $5,648,297,865 $329,310,310 $1,546,560,049 $1,256,358,081 $2,682,696,728 $262,121,028
--------------- -------------- --------------- --------------- --------------- --------------
--------------- -------------- --------------- --------------- --------------- --------------
* For the period from
inception May 30, 1998
to June 30, 1998.
<CAPTION>
HARTFORD
HARTFORD HARTFORD GROWTH AND
SMALL COMPANY MIDCAP INCOME
HLS FUND, INC. HLS FUND, INC. HLS FUND*
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment
income............... $ (255,991) $ (53,915) $ 4,686
Net realized gain
(loss)............... (1,151,141) 1,523,015 184
Net unrealized
appreciation
(depreciation) of
investments.......... 21,103,671 6,996,523 141,790
-------------- -------------- --------------
Net increase (decrease)
in net assets
resulting from
operations........... 19,696,540 8,465,623 146,660
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. -- (1,000) --
Class IB............. -- -- --
From net realized gain
on investments
Class IA............. (3,776,000) -- --
Class IB............. -- -- --
-------------- -------------- --------------
Total
distributions...... (3,776,000) (1,000) --
-------------- -------------- --------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 62,854,907 47,018,509 3,967,775
Class IB............. 249,263 -- 10,000
-------------- -------------- --------------
Net increase
(decrease) in net
assets resulting
from capital share
transactions....... 63,104,170 47,018,509 3,977,775
-------------- -------------- --------------
Total increase in net
assets............. 79,024,710 55,483,132 4,124,435
NET ASSETS:
Beginning of period.... 210,769,434 27,588,907 --
-------------- -------------- --------------
End of period.......... $280,794,144 $83,072,039 $4,124,435
-------------- -------------- --------------
-------------- -------------- --------------
* For the period from
inception May 30, 1998
to June 30, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-41
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HARTFORD HARTFORD HARTFORD HARTFORD
BOND STOCK MONEY MARKET ADVISERS
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment
income............... $ 29,895,329 $ 43,535,296 $ 29,943,455 $ 174,306,949
Net realized gain
(loss) on
investments.......... 7,061,914 173,861,274 6,689 297,333,336
Net unrealized
appreciation
(depreciation) of
investments.......... 13,239,598 796,616,926 -- 1,046,771,063
---------------- --------------- --------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations........... 50,196,841 1,014,013,496 29,950,144 1,518,411,348
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (28,506,187) (42,197,246) (29,943,455) (170,527,116)
From net realized gain
on investments....... -- (161,851,967) (6,689) (270,771,078)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares............... 150,801,506 1,228,638,401 2,014,842,442 1,017,109,674
Reinvested
distributions........ 28,506,187 204,049,153 29,947,294 441,298,194
Cost of shares
repurchased.......... (50,676,350) (523,538,867) (1,974,895,094) (131,138,289)
---------------- --------------- --------------- ----------------
Net increase
(decrease) in net
assets resulting
from capital share
transactions........ 128,631,343 909,148,687 69,894,642 1,327,269,579
---------------- --------------- --------------- ----------------
Total increase in net
assets.............. 150,321,997 1,719,112,970 69,894,642 2,404,382,733
NET ASSETS:
Beginning of year...... 402,547,800 2,994,208,591 542,585,576 5,879,529,168
---------------- --------------- --------------- ----------------
End of year............ $ 552,869,797 $4,713,321,561 $ 612,480,218 $8,283,911,901
---------------- --------------- --------------- ----------------
---------------- --------------- --------------- ----------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 145,350,512 261,136,064 2,014,842,442 427,999,289
Reinvested
distributions........ 27,684,476 47,265,691 29,947,294 195,721,711
Shares repurchased..... (49,276,444) (111,192,689) (1,974,895,094) (55,281,602)
---------------- --------------- --------------- ----------------
Net increase (decrease)
in capital shares
outstanding.......... 123,758,544 197,209,066 69,894,642 568,439,398
---------------- --------------- --------------- ----------------
---------------- --------------- --------------- ----------------
</TABLE>
* For the period from inception, July 15, 1997, to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-42
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
HARTFORD MORTGAGE HARTFORD INTERNATIONAL HARTFORD
CAPITAL SECURITIES INDEX OPPORTUNITIES HARTFORD INTERNATIONAL
APPRECIATION HLS FUND, HLS FUND, HLS FUND, DIVIDEND AND GROWTH ADVISERS HLS
HLS FUND, INC. INC. INC. INC. HLS FUND, INC. FUND, INC.
--------------- ------------- ------------- ------------- --------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income............... $ 18,401,175 $ 21,179,064 $ 13,477,109 $ 16,284,965 $ 31,471,557 $ 4,979,715
Net realized gain
(loss) on
investments.......... 325,012,733 1,887,304 27,891,406 22,987,627 76,546,072 3,812,903
Net unrealized
appreciation
(depreciation) of
investments.......... 446,257,178 4,663,003 194,778,278 (39,765,725) 265,339,837 (2,236,289)
--------------- ------------- ------------- ------------- --------------------- -------------
Net increase (decrease)
in net assets
resulting from
operations........... 789,671,086 27,729,371 236,146,793 (493,133) 373,357,466 6,556,329
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (23,026,942) (19,179,286) (12,572,622) (10,088,484) (27,536,907) (5,624,995)
From net realized gain
on investments....... (262,285,067) -- (54,414,034) (75,709,860) (27,905,705) (383,508)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares............... 1,567,700,149 40,002,581 832,154,018 175,623,844 759,068,188 101,220,653
Reinvested
distributions........ 285,312,010 19,179,286 66,986,656 85,798,344 55,442,612 6,008,503
Cost of shares
repurchased.......... (941,049,022) (67,525,455) (565,910,370) (78,728,142) (17,752,873) (4,681,200)
--------------- ------------- ------------- ------------- --------------------- -------------
Net increase
(decrease) in net
assets resulting
from capital share
transactions........ 911,963,137 (8,343,588) 333,230,304 182,694,046 796,757,927 102,547,956
--------------- ------------- ------------- ------------- --------------------- -------------
Total increase in net
assets.............. 1,416,322,214 206,497 502,390,441 96,402,569 1,114,672,781 103,095,782
NET ASSETS:
Beginning of year...... 3,386,669,788 325,495,183 621,064,561 996,543,031 879,980,441 104,485,742
--------------- ------------- ------------- ------------- --------------------- -------------
End of year............ $4,802,992,002 $325,701,680 $1,123,455,002 $1,092,945,600 $1,994,653,222 $207,581,524
--------------- ------------- ------------- ------------- --------------------- -------------
--------------- ------------- ------------- ------------- --------------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 373,368,266 36,817,301 319,711,524 127,140,923 430,488,870 85,766,460
Reinvested
distributions........ 76,688,687 17,908,502 27,848,903 66,285,199 32,437,147 5,312,136
Shares repurchased..... (226,071,746) (62,504,975) (217,918,590) (57,436,791) (9,921,919) (3,947,987)
--------------- ------------- ------------- ------------- --------------------- -------------
Net increase (decrease)
in capital shares
outstanding.......... 223,985,207 (7,779,172) 129,641,837 135,989,331 453,004,098 87,130,609
--------------- ------------- ------------- ------------- --------------------- -------------
--------------- ------------- ------------- ------------- --------------------- -------------
<CAPTION>
HARTFORD HARTFORD
SMALL COMPANY MIDCAP
HLS FUND, HLS FUND,
INC. INC.*
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment
income............... $ 88,783 $ 24,960
Net realized gain
(loss) on
investments.......... 12,450,126 (122,413)
Net unrealized
appreciation
(depreciation) of
investments.......... 1,186,607 1,513,711
------------- -------------
Net increase (decrease)
in net assets
resulting from
operations........... 13,725,516 1,416,258
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (95,955) (24,500)
From net realized gain
on investments....... (9,778,063) --
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares............... 161,029,937 26,374,232
Reinvested
distributions........ 9,859,112 21,452
Cost of shares
repurchased.......... (6,783,034) (198,535)
------------- -------------
Net increase
(decrease) in net
assets resulting
from capital share
transactions........ 164,106,015 26,197,149
------------- -------------
Total increase in net
assets.............. 167,957,513 27,588,907
NET ASSETS:
Beginning of year...... 42,811,921 --
------------- -------------
End of year............ $210,769,434 $27,588,907
------------- -------------
------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 132,781,679 24,427,494
Reinvested
distributions........ 8,233,190 18,866
Shares repurchased..... (5,739,202) (183,467)
------------- -------------
Net increase (decrease)
in capital shares
outstanding.......... 135,275,667 24,262,893
------------- -------------
------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-43
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
1. ORGANIZATION:
Hartford Bond HLS Fund, Inc., Hartford Stock HLS Fund, Inc., Hartford Money
Market HLS Fund, Inc., Hartford Advisers HLS Fund, Inc., Hartford Capital
Appreciation HLS Fund, Inc., Hartford Mortgage Securities HLS Fund, Inc.,
Hartford Index HLS Fund, Inc., Hartford International Opportunities HLS
Fund, Inc., Hartford Dividend and Growth HLS Fund, Inc., Hartford
International Advisers HLS Fund, Inc., Hartford Small Company HLS Fund,
Inc., Hartford MidCap HLS Fund, Inc., and Hartford Series Fund, Inc.
(comprised of Hartford Growth and Income HLS Fund) (each a "Fund" or
together the "Funds") are organized under the laws of the State of Maryland
and are registered with the Securities and Exchange Commission (SEC) under
the Investment Company Act of 1940, as amended, as diversified open-end
management investment companies.
The Funds serve as the underlying investment vehicles for certain variable
annuity and variable life insurance separate accounts and group pension
contracts of Hartford Life Insurance Company and Hartford Life and Annuity
Insurance Company (collectively, The Hartford Life Insurance Companies). The
Hartford Life Insurance Companies are affiliates of the Funds. The Funds,
which have different investment objectives and policies, are described
below.
<TABLE>
<S> <C>
Hartford Bond HLS Fund, Inc. Seeks maximum current income consistent with preservation of capital
through investing primarily in high-grade government and corporate bonds
and other debt securities.
Hartford Stock HLS Fund, Inc. Seeks long-term capital growth through investment in a diversified
portfolio of equity securities.
Hartford Money Market HLS Seeks a high level of current income consistent with liquidity and the
Fund, Inc. need for preservation of capital through investment in high-quality
money-market securities.
Hartford Advisers HLS Fund, Seeks maximum long-term total rate of return (capital growth and current
Inc. income) through investment in a varying mix of stocks, bonds and money
market instruments.
Hartford Capital Appreciation Seeks growth of capital through investment in equity securities of
HLS Fund, Inc. companies with high growth potential, including small, medium and large
companies.
Hartford Mortgage Securities Seeks a high level of current income by investing primarily Fund, Inc.in
HLS Fund, Inc. mortgage- backed securities, including securities issued by Government
National Mortgage Association.
Hartford Index HLS Fund, Inc. Seeks to approximate the price and yield performance represented by the
Standard & Poor's 500 Composite Stock Price Index through investments in
common stocks.
Hartford International Seeks growth of capital through investing primarily in foreign equity
Opportunities HLS Fund, Inc. securities issues.
Hartford Dividend and Growth Seeks a high level of current income consistent with growth of capital
HLS Fund, Inc. and moderate investment risk. Primary investments are equity securities
and securities convertible into equity securities that typically have
above average yield.
Hartford International Seeks a long-term total rate of return consistent with moderate risk.
Advisers HLS Fund, Inc. Investments include a mix of debt, equity and money market instruments
primarily with foreign issuers.
Hartford Small Company HLS Seeks growth of capital by investing primarily in equity securities
Fund, Inc. selected on the basis of potential for capital appreciation.
Hartford MidCap HLS Fund, Seeks long term capital growth through capital appreciation by investing
Inc. primarily in equity securities.
Hartford Growth and Income Seeks growth of capital and current income by investing primarily in
HLS Fund equity securities with earnings growth potential and steady or rising
dividends.
</TABLE>
M-44
<PAGE>
Each Fund, with the exception of Hartford Mortgage Securities HLS, Hartford
Index HLS, Hartford International Advisers HLS and Hartford MidCap HLS Funds
are divided into Class IA and IB shares. Each class is offered at net asset
value without a sales charge and is subject to the same expenses except that
the Class IB shares are subject to distribution fees charged pusuant to a
Rule 12-b1 plan. Distribution and Service Plans adopted in accordance with
rule 12b-1 of the Investment Company Act of 1940, as amended.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with generally accepted accounting principles in the
investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost.
b) SECURITY VALUATION--Debt securities (other than short-term obligations)
are valued on the basis of valuations furnished by an unaffiliated
pricing service which determines valuations for normal institutional size
trading units of debt securities. Mortgage securities are valued at the
bid price. Short-term securities held in Hartford Money Market HLS Fund,
Inc. are valued at amortized cost or original cost plus accrued interest
receivable, both of which approximate market value. In the remaining
Funds, short-term investments purchased with a maturity of 60 days or
less are valued at amortized cost, which approximates market value.
Short-term investments purchased with a maturity of more than 60 days are
valued based on market quotations until the remaining days to maturity
become less than 61 days. From such time until maturity, the investments
are valued at amortized cost.
Equity securities are valued at the last sales price reported on principal
securities exchanges on which such securities are traded(domestic or
foreign) or on the principal over-the-counter market on which such
securities are traded as of the close of business on the day the
securities are being valued. If no sale occurred on a particular day and
in the case of certain equity securities traded over-the-counter, then
such securities are valued at the mean between the bid and asked prices.
Securities quoted in foreign currencies are translated into U.S. dollars
at the prevailing exchange rates at the end of each business day. Options
are valued at the last sales price; if no sale took place on such day,
then options are valued at the mean between the bid and asked prices.
Securities for which market quotations are not readily available and all
other assets are valued in good faith at their fair values as determined
by, or under the direction of, the Funds' Board of Directors.
c) FOREIGN CURRENCY TRANSACTIONS--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from
the fluctuations arising from changes in the market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss on investments in the accompanying financial statements.
Net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies and the difference
between asset and liability amounts initially stated in foreign currencies
and the U.S. dollar value of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the
value of portfolio securities and other assets and liabilities at the end
of the reporting period, resulting from changes in the exchange rates.
d) REPURCHASE AGREEMENTS--A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed the
value of the repurchase agreement and, in the case of repurchase
agreements exceeding one day, the value of the underlying security(ies),
including accrued interest, is required during the term of the agreement
to be equal to or exceed the value of the repurchase agreement.
Securities which serve to collateralize the repurchase agreement are
M-45
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
held by each Fund's custodian in book entry or physical form in the
custodial account of the Fund. Repurchase agreements are valued at cost
plus accrued interest receivable.
e) JOINT TRADING ACCOUNT--Pursuant to an exemptive order issued by the SEC,
the Funds may transfer uninvested cash balances into a joint trading
account managed by The Hartford Investment Management Company or
Wellington Management Company, LLP (Wellington). These balances may be
invested in one or more repurchase agreements and/or short-term money
market instruments.
f) FUTURES, OPTIONS ON FUTURES AND OPTIONS TRANSACTIONS--The Funds enter
into futures contracts to retain their cash balance and yet be exposed to
the market, thereby providing the liquidity necessary to accommodate
redemptions while at the same time providing shareholders with the
investment return of a fully invested portfolio. A futures contract is an
agreement between two parties to buy and sell a security at a set price
on a future date. When the Funds enter into such contracts, they are
required to deposit with their custodian an amount of "initial margin" of
cash or U.S. Treasury bills. Subsequent payments, called maintenance
margin, to and from the broker-dealer, are made on a daily basis as the
price of the underlying debt security fluctuates, making the long and
short positions in the futures contract more or less valuable (i.e.,
mark-to-market), which results in an unrealized gain or loss to the
Funds. The market value of a traded futures contract is the last sale
price. In the absence of a last sale price, the last offering price is
used. In the absence of either of these prices, fair value is determined
according to procedures established by the Funds' Board of Directors. The
variation margin on futures contracts is included in excess of cash,
receivables and other assets over liabilities, or excess of liabilities
over cash, receivables and other assets, as applicable, in each Funds'
Statement of Net Assets.
At any time prior to the expiration of the futures contract, the Funds may
close the position by taking an opposite position which would operate to
terminate the position in the futures contract. A final determination of
maintenance margin is then made, additional cash is required to be paid by
or released to the Funds and the Funds realize a gain or loss.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's Statement of Net Assets as excess of cash,
receivables and other assets over liabilities or excess of liabilities
over cash, receivables and other assets and subsequently
"marked-to-market" to reflect the current market value of the option
purchased as of the end of the reporting period. If an option which the
Fund has purchased expires on its stipulated expiration date, the Fund
realizes a loss in the amount of the cost of the option. If the Fund
enters into a closing transaction, it realizes a gain or loss, depending
on whether the proceeds from the sale are greater or less than the cost of
the option. If the Fund exercises a put option, it realizes a gain or loss
from the sale of the underlying security and the proceeds from such sale
will be decreased by the premium originally paid. If the Fund exercises a
call option, the cost of the security which the Fund purchases upon
exercise will be increased by the premium originally paid to buy the call.
g) FEDERAL INCOME TAXES--For federal income tax purposes, the Funds intend
to continue to qualify as regulated investment companies under Subchapter
M of the Internal Revenue Code by distributing substantially all of their
taxable net investment income and net realized capital gains to their
shareholders or otherwise complying with the requirements of regulated
investment companies. Accordingly, no provision for federal income taxes
has been made in the accompanying financial statements.
h) FUND SHARE VALUATION AND DISTRIBUTIONS TO SHAREHOLDERS--Orders for the
Funds' shares are executed in accordance with the investment instructions
of the contract holders. Dividend income is accrued as of the ex-dividend
date. Interest income and expenses are accrued on a daily basis. The net
asset value of each Fund's shares is determined as of the close of each
business day of the New York Stock Exchange (the Exchange). Orders for
the purchase of a Fund's shares received prior to the close of the
Exchange on any day on which the Fund is open for business are priced at
the per-share net asset value determined as of the close of the Exchange.
Orders received after the close of the Exchange, or on a day on which the
Exchange and/or the Fund is not open for business, are priced at the next
determined per-share net asset value.
Dividends are declared by the Funds' Board of Directors based upon the
investment performance of the respective Funds. The policy with respect to
the Hartford Bond HLS Fund, Inc., Hartford Stock HLS Fund, Inc., Hartford
M-46
<PAGE>
Advisers HLS Fund, Inc., Hartford Capital Appreciation HLS Fund, Inc.,
Hartford Mortgage Securities HLS Fund, Inc., Hartford Index HLS Fund,
Inc., Hartford International Opportunities HLS Fund, Inc., Hartford
Dividend and Growth HLS Fund, Inc., Hartford International Advisers HLS
Fund, Inc., Hartford Small Company HLS Fund, Inc., Hartford MidCap HLS
Fund, Inc. and Hartford Growth and Income HLS Fund is to pay dividends
from net investment income and distribute realized capital gains, if any,
annually.
Hartford Money Market HLS Fund, Inc. seeks to maintain a stable net asset
value per share of $1.00 by declaring a daily dividend from net investment
income, including net short-term capital gains and losses, and by valuing
its investments using the amortized cost method. Dividends are distributed
monthly.
Distributions from net investment income and realized capital gains are
determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These differences
include the treatment of non-taxable dividends, expiring capital loss
carryforwards, foreign currency gains and losses, partnerships, losses
deferred due to wash sales and excise tax regulations. Permanent book and
tax basis differences relating to shareholder distributions result in
reclassifications to capital accounts (see Note 7).
i) FORWARD FOREIGN CURRENCY CONTRACTS--As of June 30, 1998, Hartford
Capital Appreciation HLS Fund, Inc. and Hartford International Advisers
HLS Fund, Inc., had entered into forward foreign currency exchange
contracts that obligate the Funds to repurchase/replace or sell
currencies at specified future dates. The Funds enter into forward
foreign currency contracts to hedge against adverse fluctuations in
exchange rates between currencies. The forward foreign currency
contracts' costs are included in excess of cash, receivables and other
assets over liabilities or excess of liabilities over cash, receivables
and other assets, as applicable, in the Funds' Statement of Net Assets.
Forward foreign currency contracts involve elements of market risk in
excess of the amount reflected in the Statement of Net Assets. In
addition, risks may arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of the
contracts and from unanticipated movements in the value of the foreign
currencies relative to the U.S. dollar.
j) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
k) RESTRICTED SECURITIES--Each Fund is permitted to invest upto 15% of its
net assets in illiquid securities, except for Money Market HLS Fund,
Inc., which may invest up to 10% in such securities. "Illiquid
Securities" are those that may not be sold or disposed of in the ordinary
course of business, at approximately the price used to determine a Fund's
net asset value per share. Each Fund may also purchase certain restricted
securities, commonly known as Rule 144A securities, that can be resold to
institutions and which may be determined to be liquid pursuant to
policies and guidelines established by the Funds' Board of Directors.
At June 30, 1998, the Funds held the following restricted securities
(excluding 144A issues):
<TABLE>
<CAPTION>
ACQUISITION MARKET % OF
FUND SECURITY DATE COST VALUE NET ASSETS
- ------------------------------ ------------------------------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Capital Appreciation HLS Fund,
Inc. SGW Holdings Corporation 8/14/97 $ 11,311,018 $ 6,911,717 .12%
Small Company HLS Fund, Inc. SGW Holdings Corporation 8/14/97 $ 599,992 $ 366,631 .13%
</TABLE>
3. EXPENSES:
a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS--HL Investment Advisors,
Inc. (HL Advisors) an indirect majority-owned subsidiary of The Hartford
Financial Services Group, Inc. (The Hartford), serves as investment
manager to the Funds pursuant to Investment Management Agreements
approved by each Funds' Board of Directors and shareholders.
M-47
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
The schedule below reflects the rates of compensation paid to HL Advisors
for services rendered:
<TABLE>
<CAPTION>
HARTFORD INDEX HLS FUND, INC.
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------------------ -----------
<S> <C>
All Assets 0.200%
<CAPTION>
HARTFORD MORTGAGE SECURITIES HLS FUND, INC.
AND HARTFORD MONEY MARKET HLS FUND, INC.
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------------------ -----------
<S> <C>
All Assets 0.250%
<CAPTION>
HARTFORD BOND HLS FUND, INC.
AND HARTFORD STOCK HLS FUND, INC.
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------------------ -----------
<S> <C>
On first $250 million .325%
On next $250 million .300
On next $500 million .275
Over $1 billion .250
<CAPTION>
HARTFORD ADVISERS HLS FUND, INC.,
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.,
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND,
INC.,
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.,
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.,
HARTFORD SMALL COMPANY HLS FUND, INC.,
HARTFORD MIDCAP HLS FUND, INC.,
AND HARTFORD GROWTH AND INCOME HLS FUND
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------------------ -----------
<S> <C>
On first $250 million .575%
On next $250 million .525
On next $500 million .475
Over $1 billion .425
</TABLE>
Pursuant to investment services agreements between HL Advisors and The
Hartford Investment Management Company (HIMCO), HIMCO provides the
day-to-day investment management services to the Hartford Bond HLS Fund
Inc., Hartford Money Market HLS Fund, Inc., Hartford Mortgage Securities
HLS Fund, Inc. and Hartford Index HLS Fund, Inc. HIMCO is a wholly-owned
subsidiary of The Hartford.
Pursuant to sub-advisory agreements between HL Advisors and Wellington,
Wellington provides the day-to-day investment management services to the
Hartford Stock HLS Fund, Inc., Hartford Advisers HLS Fund, Inc., Hartford
Capital Appreciation HLS Fund, Inc., Hartford International Opportunities
HLS Fund, Inc., Hartford Dividend and Growth HLS Fund, Inc., Hartford
International Advisers HLS Fund, Inc., Hartford Small Company HLS Fund,
Inc., Hartford MidCap HLS Fund, Inc. and Hartford Growth and Income HLS
Fund.
Wellington and HIMCO determine the purchase and sale of portfolio
securities and place such orders for execution in the name of the
respective Fund. In conjunction with their investment activity, Wellington
and HIMCO regularly furnish reports to the Funds' Board of Directors
concerning economic forecasts, investment strategy, portfolio activity and
performance of the Funds.
M-48
<PAGE>
b) ADMINISTRATIVE SERVICES AGREEMENT--Under the Administrative Services
Agreement between Hartford Life Insurance Company (HL) and each of the
Funds, HL provides administrative services to the Funds and receives
monthly compensation at the annual rate of .175% of each Fund's average
daily net assets. The Funds assume and pay certain other expenses
(including, but not limited to, shareholder accounting, state taxes and
directors' fees). Directors' fees represent remuneration paid or accrued
to directors not affiliated with HL or any other related company.
c) OPERATING EXPENSES--Allocable expenses of the Funds are charged to each
Fund based on the ratio of the net assets of each fund to the combined
net assets of the Funds. Nonallocable expenses are charged to each fund
based on specific identification.
4. TAX COST AND UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS:
As of June 30, 1998, the aggregate gross unrealized appreciation and
depreciation of all investments, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<CAPTION>
AGGREGATE GROSS AGGREGATE GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
FUND TAX COST APPRECIATION DEPRECIATION DEPRECIATION
- ---------------------------------------------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Hartford Bond HLS Fund, Inc......................... $ 640,082,876 $ 20,700,181 $ (3,234,022) $ 17,466,159
Hartford Stock HLS Fund, Inc........................ 3,565,285,158 2,309,946,068 (82,933,412) 2,227,012,656
Hartford Advisers HLS Fund, Inc..................... 7,084,010,541 2,938,731,191 (84,620,547) 2,854,110,644
Hartford Capital Appreciation HLS Fund, Inc......... 4,018,513,601 1,618,350,288 (287,904,760) 1,330,445,528
Hartford Mortgage Securities HLS Fund, Inc.......... 299,109,588 4,900,727 (429,863) 4,470,864
Hartford Index HLS Fund, Inc........................ 1,030,944,139 516,460,414 (24,343,643) 492,116,771
Hartford International Opportunities HLS Fund,
Inc................................................ 21,392,463 22,970,406 (6,810,860) 16,159,546
Hartford Dividend & Growth HLS Fund, Inc............ 2,149,535,648 546,271,712 (55,589,628) 490,682,084
Hartford International Advisers HLS Fund, Inc....... 989,738,016 199,670,006 (39,676,835) 159,993,171
Hartford Small Company HLS Fund, Inc................ 247,799,667 35,584,048 (15,564,392) 20,019,656
Hartford MidCap Fund HLS Fund, Inc.................. 72,620,755 10,573,879 (2,086,304) 8,487,575
Hartford Growth and Income HLS Fund................. 3,716,682 185,534 (43,745) 141,789
</TABLE>
5. AFFILIATE HOLDINGS:
a) HARTFORD MIDCAP HLS FUND, INC.--HL Investment Advisers, Inc. has
ownership of 3,000,000 shares of Hartford MidCap HLS Fund, Inc. and
Hartford Growth and Income HLS Fund representing 4.8% and 75.6%,
respectively of the total outstanding shares of each Fund as of June 30,
1998.
b) As of June 30, 1998, certain HL group pension contracts held direct
interests in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
FUND SHARES TOTAL SHARES
------------------------------------------------------ ---------- ------------
<S> <C> <C>
Hartford Bond HLS Fund, Inc........................... 4,834,749 .75%
Hartford Money Market HLS Fund Inc.................... 26,217,960 4.06
Hartford Stock HLS Fund, Inc.......................... 4,119,684 .40
Hartford Advisers HLS Fund, Inc....................... 32,874,765 .91
Hartford Capital Appreciation HLS Fund, Inc........... 24,465,579 2.00
Hartford Mortgage Securities HLS Fund, Inc............ 14,757,318 5.00
Hartford Index HLS Fund, Inc.......................... 31,054,910 6.63
Hartford International Opportunities HLS Fund, Inc.... 10,970,561 1.24
Hartford Dividend and Growth HLS Fund, Inc............ 6,985,353 .54
Hartford International Advisers HLS Fund, Inc......... 861,122 .38
</TABLE>
M-49
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
6. INVESTMENT TRANSACTIONS:
For the six months ended June 30, 1998, aggregate purchases and sales of
investment securities (excludes short-term investments) were as follows:
<TABLE>
<CAPTION>
FUND PURCHASE AT COST SALES AT PROCEEDS
------------------------------------------ ----------------- -----------------
<S> <C> <C>
Hartford Bond HLS Fund, Inc............... $ 604,811,366 $ 480,483,193
Hartford Stock HLS Fund, Inc.............. 1,061,924,129 584,944,576
Hartford Advisers HLS Fund, Inc........... 1,689,884,052 1,129,321,894
Hartford Capital Appreciation HLS Fund,
Inc...................................... 1,467,226,627 1,175,448,951
Hartford Mortgage Securities HLS Fund,
Inc...................................... 522,066,013 491,538,609
Hartford Index HLS Fund, Inc.............. 221,385,374 11,710,390
Hartford International Opportunities HLS
Fund, Inc................................ 806,689,764 794,275,013
Hartford Dividend and Growth HLS Fund,
Inc...................................... 963,638,560 502,080,152
Hartford International Advisers HLS Fund,
Inc...................................... 191,512,683 147,785,921
Hartford Small Company HLS Fund, Inc...... 377,046,575 333,516,188
Hartford MidCap HLS Fund, Inc............. 64,904,928 19,485,674
Hartford Growth and Income HLS Fund....... 3,748,209 31,710
</TABLE>
7. RECLASSIFICATION OF CAPITAL ACCOUNTS:
In accordance with AICPA statement of position 93-2, DETERMINATION,
DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES, the Funds have
recorded several reclassifications in their capital accounts. These
reclassifications had no impact on the net asset value per shares of the
Funds and are designed generally to present undistributed income and
realized gains on a tax basis which is considered to be more informative to
the shareholder. As of December 31, 1997 the Funds recorded the following
reclassifications to increase (decrease) the accounts listed below.
<TABLE>
<CAPTION>
ACCUMULATED
ACCUMULATED UNDISTRIBUTED
UNDISTRIBUTED (DISTRIBUTION
(DISTRIBUTION IN EXCESS OF)
IN EXCESS OF) NET REALIZED
NET INVESTMENT GAIN ON PAID-IN
FUND INCOME INVESTMENTS SURPLUS
- ---------------------------------------------------------------------------- -------------- --------------- --------------
<S> <C> <C> <C>
Hartford Bond HLS Fund, Inc................................................. $ (41,029) $ 41,0290 $ 0
Hartford Stock HLS Fund, Inc................................................ (20,5130) 20,513 0
Hartford Advisers HLS Fund, Inc............................................. 418,269) (418,269) 0
Hartford Capital Appreciation HLS Fund, Inc................................. 6,642,158 (6,642,158) 0
Hartford Mortgage Securities HLS Fund, Inc.................................. (416,537) 416,537 0
Hartford International Opportunities HLS Fund, Inc.......................... (6,758,168) 6,788,167 (29,999)
Hartford Dividend and Growth HLS Fund, Inc.................................. (231,694) 244,530 (12,836)
Hartford International Advisers HLS Fund, Inc............................... 1,257,390 (1,257,390 0
Hartford Small Company HLS Fund, Inc........................................ 7,062 (7,062)
</TABLE>
M-50
<PAGE>
8. CAPITAL SHARE TRANSACTIONS:
The following information is for the period ending June 30, 1998:
<TABLE>
<CAPTION>
HARTFORD BOND HARTFORD STOCK HARTFORD MONEY MARKET HARTFORD ADVISERS
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
---------------------------- ------------------------- -------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold...... 140,139,917 $150,096,170 123,604,723 $691,570,261 944,202,743 $944,203,735 267,349,848 $715,446,353
Shares issued on
reinvestment of
distributions... 1,414,284 1,499,999 32,495,236 175,300,001 16,037,426 16,037,426 116,152,059 301,899,991
Shares redeemed.. (24,778,741) (26,468,367) (48,999,001) (273,830,385) (927,558,007) (927,558,007) (30,443,090) (81,179,461)
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
Net Increase..... 116,775,460 $125,127,802 107,100,958 $593,039,877 32,682,162 $ 32,683,154 353,058,817 $936,166,883
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
HARTFORD CAPITAL HARTFORD MORTGAGE HARTFORD INTERNATIONAL
APPRECIATION SECURITIES HARTFORD INDEX OPPORTUNITIES
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
---------------------------- ------------------------- -------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold...... 176,967,773 $804,422,818 20,770,514 $ 22,806,104 120,404,516 $374,169,681 44,287,452 $ 61,140,228
Shares issued on
reinvestment of
distributions... 71,437,060 320,999,999 2,020,729 2,200,000 10,055,222 30,600,000 55,643,802 72,865,058
Shares redeemed.. (118,636,205) (537,722,406) (27,336,697) (30,004,654) (52,209,028) (162,285,451) (56,783,350) (75,576,887)
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
Net Increase..... 129,768,628 $587,700,411 (4,545,454) (4,998,550) 78,250,710 $242,484,230 43,147,904 $ 58,428,399
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
HARTFORD DIVIDEND AND GROWTH HARTFORD INTERNATIONAL HARTFORD SMALL COMPANY HLS HARTFORD MIDCAP
HLS FUND, INC. ADVISERS HLS FUND, INC. FUND, INC. HLS FUND, INC.
---------------------------- ------------------------- -------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold...... 227,722,909 $465,719,661 29,357,390 $ 33,656,891 49,403,077 $ 62,836,009 39,285,617 $ 51,925,062
Shares issued on
reinvestment of
distributions... 40,497,356 80,800,000 27,522,863 29,712,912 2,958,223 3,776,000 747 916
Shares redeemed.. (6,874,585) (14,116,207) (5,216,557) (6,034,025) (3,013,593) (3,757,102) (1,455,196) (1,907,469)
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
Net Increase..... 261,345,680 $532,403,454 51,663,696 $ 57,353,778 49,347,707 $ 62,854,907 37,831,168 $ 50,018,509
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
HARTFORD GROWTH AND INCOME
HLS FUND
----------------------------
SHARES AMOUNT
------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold...... 3,981,156 $ 3,995,482
Shares issued on
reinvestment of
distributions... -- --
Shares redeemed.. (17,612) (17,707)
------------- ------------
Net Increase..... 3,963,544 $ 3,977,775
------------- ------------
------------- ------------
</TABLE>
M-51
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD BOND HARTFORD STOCK HARTFORD MONEY MARKET HARTFORD ADVISERS
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
---------------------------- ------------------------- -------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
CLASS IB
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold...... 1,139,236 $ 1,150,176 1,993,605 $ 2,022,233 512,019 $ 512,019 6,266,067 $ 6,324,501
Shares issued on
reinvestment of
distributions... -- -- -- -- 3,075 3,075 -- --
Shares redeemed.. (4,775) (4,855) (64) (67) (127,139) (127,139) (160,640) (163,090)
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
Net Increase..... 1,134,461 $ 1,145,321 1,993,541 $ 2,022,166 387,955 $ 387,955 6,105,427 $ 6,161,411
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
HARTFORD CAPITAL HARTFORD INTERNATIONAL
APPRECIATION OPPORTUNITIES HARTFORD DIVIDEND AND HARTFORD SMALL COMPANY
HLS FUND, INC. HLS FUND, INC. GROWTH HLS FUND, INC. HLS FUND, INC.
---------------------------- ------------------------- -------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold...... 1,873,884 $ 1,844,044 279,319 $ 284,133 2,846,506 $ 2,808,906 258,716 $ 249,612
Shares issued on
reinvestment of
distributions... -- -- -- -- -- -- -- --
Shares redeemed.. (42) (42) (1,049) (1,075) (94) (92) (370) (349)
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
Net Increase..... 1,873,842 $ 1,844,002 278,270 $ 283,058 2,846,412 $ 2,808,814 258,346 $ 249,263
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
------------- ------------ ----------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
HARTFORD GROWTH AND INCOME
HLS FUND, INC.
----------------------------
SHARES AMOUNT
------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold...... 10,000 $ 10,000
Shares issued on
reinvestment of
distributions... -- --
Shares redeemed.. -- --
------------- ------------
Net Increase..... 10,000 $ 10,000
------------- ------------
------------- ------------
</TABLE>
M-52
<PAGE>
[This page is intentionally left blank]
<PAGE>
Hartford Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
-- SELECTED PER-SHARE DATA(3) --
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET REALIZED
AND
NET ASSET UNREALIZED
VALUE AT NET GAIN TOTAL FROM
BEGINNING INVESTMENT (LOSS) ON INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS
--------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
HARTFORD BOND HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... $1.050 $0.029 $ 0.016 $ 0.045
For the Year Ended
December 31,
1997................... 1.000 0.063 0.047 0.110
1996................... 1.028 0.064 (0.029) 0.035
1995................... 0.926 0.064 0.102 0.166
1994................... 1.044 0.060 (0.100) (0.040)
1993................... 1.024 0.062 0.039 0.101
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 0.006 0.016 0.022
HARTFORD STOCK HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 5.123 0.024 1.049 1.073
For the Year Ended
December 31,
1997................... 4.143 0.050 1.196 1.246
1996................... 3.527 0.060 0.763 0.823
1995................... 2.801 0.070 0.840 0.910
1994................... 3.099 0.061 (0.111) (0.050)
1993................... 2.965 0.053 0.339 0.392
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 -- 0.046 --
HVA MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 1.000 0.025 -- 0.025
For the Year Ended
December 31,
1997................... 1.000 0.049 -- 0.049
1996................... 1.000 0.500 -- 0.050
1995................... 1.000 0.056 -- 0.056
1994................... 1.000 0.039 -- 0.039
1993................... 1.000 0.029 -- 0.029
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 0.010 -- 0.010
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 2.527 0.030 0.352 0.382
For the Year Ended
December 31,
1997................... 2.169 0.056 0.455 0.511
1996................... 1.958 0.059 0.255 0.314
1995................... 1.600 0.064 0.377 0.441
1994................... 1.752 0.054 (0.100) (0.046)
1993................... 1.676 0.050 0.145 0.195
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 0.002 0.036 0.038
HARTFORD CAPITAL
APPRECIATION HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 4.410 0.014 0.498 0.512
For the Year Ended
December 31,
1997................... 3.914 0.020 0.794 0.814
1996................... 3.490 0.022 0.655 0.677
1995................... 2.860 0.030 0.785 0.815
1994................... 3.052 0.011 0.070 0.081
1993................... 2.634 0.003 0.526 0.529
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 0.001 (0.016) (0.015)
HARTFORD MORTGAGE
SECURITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... 1.084 0.034 0.002 0.036
For the Year Ended
December 31,
1997................... 1.056 0.071 0.022 0.093
1996................... 1.071 0.069 (0.018) 0.051
1995................... 0.984 0.068 0.087 0.155
1994................... 1.075 0.068 (0.086) (0.018)
1993................... 1.079 0.071 (0.004) 0.067
</TABLE>
(1) Annualized
(2) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford Investment Management Company)
reached $20 million. The ratio of expenses to average net assets would have
been higher if management fees were not waived. The ratio of net investment
income would have been lowwer if management fees were not waived.
(3) Information presented relates to a share of capital stock outstanding
throughout the indicated period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-54
<PAGE>
- --------------------------------------------------------------------------------
-- RATIOS AND
SUPPLEMENTAL DATA --
-------------------------------------------------
---------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
DISTRIBUTIONS FROM NET NET INCREASE NET ASSET NET ASSETS
FROM NET REALIZED (DECREASE) IN VALUE AT AT END OF
INVESTMENT GAIN ON TOTAL NET ASSET END TOTAL PERIOD
INCOME INVESTMENTS DISTRIBUTIONS VALUE OF PERIOD RETURN (IN THOUSANDS)
---------- ------------- ------------- ------------- --------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
HARTFORD BOND HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... $(0.003) $ -- $(0.003) $ 0.042 $1.092 4.28% $ 702,487
For the Year Ended
December 31,
1997................... (0.060) -- (0.060) 0.050 1.050 11.35 552,870
1996................... (0.063) -- (0.063) (0.028) 1.000 3.54 402,548
1995................... (0.064) -- (0.064) 0.102 1.028 18.49 342,495
1994................... (0.060) (0.018) (0.078) (0.118) 0.926 (3.95) 247458
1993................... (0.062) (0.019) (0.081) 0.020 1.044 10.24 239,602
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- -- -- 0.022 1.022 2.20 1,159
HARTFORD STOCK HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... (0.002) (0.184) (0.186) 0.887 6.010 21.36 6,172,891
For the Year Ended
December 31,
1997................... (0.049) (0.217) (0.266) 0.980 5.123 31.38 4,713,322
1996................... (0.059) (0.148) (0.207) 0.616 4.143 24.33 2,994,209
1995................... (0.070) (0.114) (0.184) 0.726 3.527 34.10 1,876,884
1994................... (0.061) (0.187) (0.248) (0.298) 2.801 (1.89) 1,163,158
1993................... (0.053) (0.205) (0.258) 0.134 3.099 14.34 968,425
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- -- -- 0.046 1.046 4.60 1,994
HVA MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... (0.025) -- (0.025) -- 1.000 2.63 645,163
For the Year Ended
December 31,
1997................... (0.049) -- (0.049) -- 1.000 5.31 612,480
1996................... (0.050) -- (0.050) -- 1.000 5.09 542,586
1995................... (0.056) -- (0.056) -- 1.000 5.74 339,709
1994................... (0.039) -- (0.039) -- 1.000 3.95 321,465
1993................... (0.029) -- (0.029) -- 1.000 2.94 234,088
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... (0.010) -- (0.010) -- 1.000 -- 388
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... (0.001) (0.089) (0.090) 0.292 2.819 15.44 10,237,520
For the Year Ended
December 31,
1997................... (0.055) (0.098) (0.153) 0.358 2.527 24.51 8,283,912
1996................... (0.059) (0.044) (0.103) 0.211 2.169 16.62 5,879,529
1995................... (0.064) (0.019) (0.083) 0.358 1.958 28.34 4,262,769
1994................... (0.054) (0.052) (0.106) (0.152) 1.600 (2.74) 3,034,034
1993................... (0.050) (0.069) (0.119) 0.076 1.752 12.25 2,426,550
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- -- -- 0.038 1.038 3.80 6,336
HARTFORD CAPITAL
APPRECIATION HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... (0.001) (0.289) (0.290) 0.222 4.632 11.82 5,646,452
For the Year Ended
December 31,
1997................... (0.022) (0.296) (0.318) 0.496 4.410 22.34 4,802,992
1996................... (0.025) (0.228) (0.253) 0.424 3.914 20.70 3,386,670
1995................... (0.030) (0.155) (0.185) 0.630 3.490 30.25 2,157,892
1994................... (0.011) (0.262) (0.273) (0.192) 2.860 2.50 1,158,644
1993................... (0.003) (0.108) (0.111) 0.418 3.052 20.80 778,904
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- -- -- (0.015) 0.985 (1.50) 1,846
HARTFORD MORTGAGE
SECURITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... (0.007) -- (0.007) 0.029 1.113 3.35 329,310
For the Year Ended
December 31,
1997................... (0.065) -- (0.065) 0.028 1.084 9.01 325,702
1996................... (0.066) -- (0.066) (0.015) 1.056 4.99 325,495
1995................... (0.068) -- (0.068) 0.087 1.071 16.17 327,565
1994................... (0.068) (0.005) (0.073) (0.091) 0.984 (1.61) 304,147
1993................... (0.071) -- -- (0.004) 1.075 6.31 365,198
<CAPTION>
RATIO OF
RATIO OF NET
OPERATING INVESTMENT
EXPENSES INCOME PORTFOLIO
TO AVERAGE TO AVERAGE TURNOVER
NET ASSETS(1) NET ASSETS(1) RATE
------------- --------------- ---------
<S> <C> <C> <C>
HARTFORD BOND HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 0.50% 6.01% 83.3%
For the Year Ended
December 31,
1997................... 0.51 6.58 112.9
1996................... 0.52 6.37 212.0
1995................... 0.53 6.51 215.0
1994................... 0.55 6.23 328.8
1993................... 0.57 5.93 494.3
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 0.33 2.94 --
HARTFORD STOCK HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 0.46 1.00 11.4
For the Year Ended
December 31,
1997................... 0.45 1.11 31.6
1996................... 0.46 1.59 42.3
1995................... 0.48 2.23 52.9
1994................... 0.50 2.17 63.8
1993................... 0.53 1.86 69.0
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 0.64 0.46
HVA MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 0.44 5.24 --
For the Year Ended
December 31,
1997................... 0.44 5.21 --
1996................... 0.44 5.04 --
1995................... 0.45 5.57 --
1994................... 0.47 3.99 --
1993................... 0.48 2.91 --
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- 0.30 --
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 0.63 2.36 12.4
For the Year Ended
December 31,
1997................... 0.63 2.44 36.1
1996................... 0.63 2.92 53.8
1995................... 0.65 3.57 63.5
1994................... 0.65 3.34 60.0
1993................... 0.69 3.07 55.3
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 0.40 1.00 --
HARTFORD CAPITAL
APPRECIATION HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 0.67 0.67 23.5
For the Year Ended
December 31,
1997................... 0.64 0.44 57.6
1996................... 0.65 0.60 85.4
1995................... 0.68 0.95 78.6
1994................... 0.72 0.40 73.3
1993................... 0.76 0.12 91.4
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 0.85 0.61 --
HARTFORD MORTGAGE
SECURITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... 0.45 6.26 163.4
For the Year Ended
December 31,
1997................... 0.45 6.60 46.5
1996................... 0.45 6.67 201.0
1995................... 0.47 6.50 489.4
1994................... 0.48 6.65 365.7
1993................... 0.49 6.49 183.4
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-55
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
-- SELECTED PER-SHARE DATA(3) --
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET REALIZED
AND
NET ASSET UNREALIZED
VALUE AT NET GAIN TOTAL FROM
BEGINNING INVESTMENT (LOSS) ON INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS
--------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
HARTFORD INDEX HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... $2.878 $0.018 $ 0.478 $ 0.496
For the Year Ended
December 31,
1997................... 2.832 0.035 0.692 0.727
1996................... 2.028 0.044 0.393 0.437
1995................... 1.522 0.044 0.507 0.551
1994................... 1.546 0.038 (0.024) 0.014
1993................... 1.450 0.035 0.096 0.131
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 1.294 0.015 0.195 0.210
For the Year Ended
December 31,
1997................... 1.407 0.022 (0.019) 0.003
1996................... 1.306 0.023 0.140 0.163
1995................... 1.176 0.020 0.141 0.161
1994................... 1.215 0.016 (0.039) (0.023)
1993................... 0.917 0.009 0.298 0.307
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 0.003 0.018 0.021
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 1.952 0.017 0.194 0.211
For the Year Ended
December 31,
1997................... 1.547 0.035 0.445 0.480
1996................... 1.317 0.034 0.258 0.292
1995................... 0.994 0.033 0.323 0.356
From inception, March
8, 1994, through
December 31, 1994.... 1.000 0.024 (0.005) 0.019
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 0.002 (0.013) (0.011)
HARTFORD INTERNATIONAL
ADVISERS HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... 1.175 0.017 0.122 0.139
For the Year Ended
December 31,
1997................... 1.167 0.056 0.006 0.062
1996................... 1.109 0.040 0.093 0.133
From inception March 1,
1995, through
December 31, 1995.... 1.000 0.030 0.126 0.156
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 1.202 (0.001 ) 0.108 0.107
For the Year Ended
December 31,
1997................... 1.069 0.001 0.195 0.196
From inception, August
9, 1996, through
December 31, 1996.... 1.000 0.002 0.069 0.071
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.000 -- (0.037) (0.037)
HARTFORD MIDCAP HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... 1.137 (0.001 ) 0.202 0.201
From inception, July
15, 1997, through
December 31, 1997.... 1.000 0.001 0.137 0.138
HARTFORD GROWTH AND
INCOME HLS FUND
From inception, May 31,
1998, through June
30, 1998 (unaudited)
Class IA............... 1.000 0.001 0.040 0.041
From inception, May 31,
1998, through June
30, 1998 (unaudited)
Class IB............... 1.000 -- 0.040 0.040
</TABLE>
(1) Annualized
(2) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford Investment Management Company)
reached $20 million. The ratio of expenses to average net assets would have
been higher if management fees were not waived. The ratio of net investment
income would have been lowwer if management fees were not waived.
(3) Information presented relates to a share of capital stock outstanding
throughout the indicated period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-56
<PAGE>
- --------------------------------------------------------------------------------
-- RATIOS AND
SUPPLEMENTAL DATA --
-------------------------------------------------
---------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
DISTRIBUTIONS FROM NET NET INCREASE NET ASSET NET ASSETS
FROM NET REALIZED (DECREASE) IN VALUE AT AT END OF
INVESTMENT GAIN ON TOTAL NET ASSET END TOTAL PERIOD
INCOME INVESTMENTS DISTRIBUTIONS VALUE OF PERIOD RETURN (IN THOUSANDS)
---------- ------------- ------------- ------------- --------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
HARTFORD INDEX HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... $(0.002) $(0.072) $(0.074) $ 0.422 $3.300 17.46% $1,546,560
For the Year Ended
December 31,
1997................... (0.035) (0.196) (0.231) 0.496 2.878 32.61 1,123,455
1996................... (0.044) (0.039) (0.083) 0.354 2.382 22.09 621,065
1995................... (0.044) (0.001) (0.045) 0.506 2.028 36.55 318,253
1994................... (0.038) -- (0.038) (0.024) 1.522 0.94 157,660
1993................... (0.035) -- (0.035) 0.096 1.546 9.12 140,396
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... (0.001) (0.088) (0.089) 0.121 1.415 16.73 1,256,074
For the Year Ended
December 31,
1997................... (0.012) (0.104) (0.116) (0.113) 1.294 0.34 1,092,946
1996................... (0.025) (0.037) (0.062) 0.101 1.407 12.91 996,543
1995................... (0.020) (0.011) (0.031) 0.130 1.306 13.93 686,475
1994................... (0.016) -- (0.016) (0.039) 1.176 (1.94) 563,765
1993................... (0.009) -- (0.009) 0.298 1.215 33.73 281,608
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- -- -- 0.021 1.021 2.10 284
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... (0.004) (0.070) (0.074) 0.137 2.089 10.93 2,679,882
For the Year Ended
December 31,
1997................... (0.031) (0.044) (0.075) 0.405 1.952 31.89 1,994,653
1996................... (0.034) (0.028) (0.062) 0.230 1.547 22.91 879,980
1995................... (0.033) -- (0.033) 0.323 1.317 36.37 265,070
From inception, March
8, 1994, through
December 31, 1994.... (0.024) (0.001) (0.025) (0.006) 0.994 1.96 55,066
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- -- -- (0.011) 0.989 (1.100) 2,814
HARTFORD INTERNATIONAL
ADVISERS HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... (0.134) (0.032) (0.166) (0.027) 1.148 12.67 262,121
For the Year Ended
December 31,
1997................... (0.050) (0.004) (0.054) 0.008 1.175 5.52 207,582
1996................... (0.051) (0.024) (0.075) 0.058 1.167 12.25 104,486
From inception March 1,
1995, through
December 31, 1995.... (0.030) (0.017) (0.047) 0.109 1.109 15.84 31,264
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... -- (0.020) (0.020) 0.087 1.289 8.89 289,545
For the Year Ended
December 31,
1997................... (0.001) (0.062) (0.063) 0.133 1.202 18.38 210,769
From inception, August
9, 1996, through
December 31, 1996.... (0.002) -- (0.002) 0.069 1.069 18.12 42,812
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... -- -- -- (0.037) 0.963 (3.70) 249
HARTFORD MIDCAP HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... -- -- -- 0.201 1.338 17.64 83,072
From inception, July
15, 1997, through
December 31, 1997.... (0.001) -- (0.001) 0.137 1.137 13.81 27,589
HARTFORD GROWTH AND
INCOME HLS FUND
From inception, May 31,
1998, through June
30, 1998 (unaudited)
Class IA............... -- -- -- 0.041 1.041 4.1 4,114
From inception, May 31,
1998, through June
30, 1998 (unaudited)
Class IB............... -- -- -- 0.040 1.040 4 10
<CAPTION>
RATIO OF
RATIO OF NET
OPERATING INVESTMENT
EXPENSES INCOME PORTFOLIO
TO AVERAGE TO AVERAGE TURNOVER
NET ASSETS(1) NET ASSETS(1) RATE
------------- --------------- ---------
<S> <C> <C> <C>
HARTFORD INDEX HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... 0.40% 1.24% 0.9%
For the Year Ended
December 31,
1997................... 0.39 1.52 5.7
1996................... 0.39 2.07 19.3
1995................... 0.39 2.46 1.5
1994................... 0.45 2.50 1.8
1993................... 0.49 2.36 0.8
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 1.07 2.3 73.2
For the Year Ended
December 31,
1997................... 0.77 1.48 72.7
1996................... 0.79 1.74 70.0
1995................... 0.86 1.60 55.6
1994................... 0.85 1.42 46.4
1993................... 1.00 0.84 31.8
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 1.30 2.75 --
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 0.66 1.86 21.6
For the Year Ended
December 31,
1997................... 0.68 2.21 34.2
1996................... 0.73 2.52 56.9
1995................... 0.77 2.91 41.4
From inception, March
8, 1994, through
December 31, 1994.... 0.83 3.52 27.8
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 0.82 1.64 --
HARTFORD INTERNATIONAL
ADVISERS HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... 0.84 3.38 74.5
For the Year Ended
December 31,
1997................... 0.87 3.08 162.5
1996................... 0.96 3.24 95.2
From inception March 1,
1995, through
December 31, 1995.... 0.65(2) 3.36(2) 47.2
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 1998
(unaudited)
Class IA............... 0.77 0.20 136.4
For the Year Ended
December 31,
1997................... 0.77 0.08 222.2
From inception, August
9, 1996, through
December 31, 1996.... 0.72(2) 0.31(2) 31.8
From inception April 1,
1998 to June 30, 1998
(unaudited)
Class IB............... 0.47 (0.38) --
HARTFORD MIDCAP HLS FUND,
INC.
For the Six Months
Ended June 30, 1998
(unaudited).......... 0.81 (0.21) 37.18
From inception, July
15, 1997, through
December 31, 1997.... 0.46(2) 0.45(2) 46.1
HARTFORD GROWTH AND
INCOME HLS FUND
From inception, May 31,
1998, through June
30, 1998 (unaudited)
Class IA............... 0.15(2) 1.45(2) 0.8
From inception, May 31,
1998, through June
30, 1998 (unaudited)
Class IB............... 0.21(2) 1.37(2) 0.0
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-57
<PAGE>
[LOGO]
Nations Variable Annuity is a flexible premium variable annuity issued by
Hartford Life Insurance Company, Simsbury, CT (countrywide: HLVA94; FL:
HLVA94FL; NY: HLVACRT94NY and NC: HLVA94NC). Nations Variable Annuity is
underwritten by Hartford Securities Distribution Company, Inc.
The Hartford Life Insurance Companies BULK RATE
P.O. Box 5085 U.S. POSTAGE
Hartford, CT 06102-5085 PAID
PERMIT #20
HOLLISTON, MA
01746
NATANN-8-98-1041 Printed in U.S.A. (c) 1998 The Hartford, Hartford, CT 06115
